How it has affected the real estate industry.

While it has been a relatively easy tax to implement, its affect on the real estate industry has resulted in much confusion and misunderstanding – some even attributing HST to the recent decline in sales nationally.  Others wonder about the appropriateness of its timing given our fragile economy.  Under this new tax structure, new homes are subject to the combined tax, although buyers of new homes receive a rebate of up to $24,000 regardless of the price of the new home.  Buyers of new residential rental properties receive a similar rebate.  The HST, however, is not applicable to the purchase of a resale home.

Information about the Harmonized Sales Tax, it seems, is not reaching the consumer.  In a recent survey conducted by our sister company, Royal LePage Real Estate Services, almost half (46.7 percent) of Ontario and British Columbia residents actively participating in the market stated that they were confused about the HST.  Among the most common responses to the survey’s open-ended questions were that many home buyers incorrectly believe HST applies to the sale price of resale properties.  Nearly half (43.9 per cent) of the 765 REALTORS™ polled in Ontario and B.C. said the HST is having the greatest effect on the cooling residential real estate market, compared to just 28.4 per cent who cited rising interest rates as having the greatest effect. In all, more than 86 per cent of respondents said the HST is affecting their business somewhat.