We talked a bit ago about the new HST that is now effective in British Columbia and in Ontario. It has ramifications for the home mortgage market, because the rules for sales taxes paid on a house have changed. For example, in Ontario, a rebate compensating for the HST will leave the first $400,000 of a new home purchase unaffected, however, the portion of a home above $400,000 will be charged the full HST. With the price of housing–particularly in Toronto-quite high, this may change consumers’ plans, at least for some.
An article by Vito Pilieci in the Financial Post talks about some of the things that may actually start to go underground due to the new taxes. The governments of BC and Ontario tout the fairness of the HST because the VAT is supposed to be easier, more efficient, and it should improve the jurisdictions’ competiveness in the larger national and global marketplace. However, they have taken the opportunity to raise a selection of taxes which will, for example, add $2.5 billion to Ontario’s coffers. This was handled by simply applying the HST across the board to include items that had previously been exempt. Additionally, the tax is expected to be a big blow to the home renovation sector and jobs that are tied to it.
Because of the negative reaction of the body politic, the Ontario Liberal government has been on a publicity tear to promote the new tax and increase its popularity among voters.
Pilieci interviews a number of people crafting ways to pay less of the tax. These include cross-border shopping, buying less and paying cash for services and so forth. There’s no good way yet to buy real estate cross border, though, so we recommend talking to a mortgage broker when you have questions about the HST and mortgages.
