[nfitz]

More like compare taxes on a $300,000 home in Toronto ($1832.78) vs a $300,000 home in Whitby ($3534.98), or worse Oshawa ($4535.41)

That's completely absurd. Taxes are for city services. You can't compare the cheapest houses in one city, to the expensive houses in another city, and then note that the taxes are lower. A $300,000 house in Toronto likely has a 15' to 18' wide lot on a street. Every single service is cheaper to provide than the much larger lot would get you in Durham.

 

[waterloowarrior]

That's completely absurd. Taxes are for city services. You can't compare the cheapest houses in one city, to the expensive houses in another city, and then note that the taxes are lower. A $300,000 house in Toronto likely has a 15' to 18' wide lot on a street. Every single service is cheaper to provide than the much larger lot would get you in Durham.

The amount of taxes are based on property values, not the cost of city services.... it doesn't matter if you have 1 person or 10 people living in a $300,000 house, you'll pay the same property taxes. The person in the $5 million house might walk everywhere, minimize resource use, and not rely on any social services, but they'll pay far more tax than the Indian family with their extended family living downstairs and 5 cars in the driveway.

People have a certain budget when buying a home.... depending on where you want to live, you may have to make tradeoffs in terms of unit type, size, ... or you might put size first and location later etc. In the end, you have $xxx,xxx amount to spend on a house, and if you chose to live in Toronto you will pay far less tax than if you choose to live in one of the suburbs.

It's unfair to directly compare the taxes on a 2000 sq ft house in Toronto vs a 2000 sq ft house in Whitby, because if a person can afford a 2000 square foot house in Toronto they'd probably buy a much more expensive house in Whitby. Or to reverse the situation, if I can afford a 2000 sq ft home in Whitby but I can't afford one in Toronto, there would be no point comparing the property tax between these cities for a house I can't afford.

 

[Eug]

That doesn't make much sense. On average larger properties cost the city more. To put it another way, a 2000 sq ft detached home in Whitby usually costs the local municipality more to service than a 800 sq ft townhouse in Toronto.

That may not be true for every single case, but on average it is true.

 

[nfitz]

That doesn't make much sense. On average larger properties cost the city more. To put it another way, a 2000 sq ft detached home in Whitby usually costs the local municipality more to service than a 800 sq ft townhouse in Toronto.

That may not be true for every single case, but on average it is true.

On average. Obviously there are local disparities, when someone living in the north-east corner of Scarborough is taxed at the same mill rate as someone downtown ... the current system has it's problems.

 

[newbuyer]

i'm a new home buyer. I signed a purchase agreement on July 16,2009 for a pre-construction condo. The purchase price is $282,400. My question is, has the GST portion (5%) and the PST (8%) already embeded in the purchase price? Or, will I have to pay 13% HST? When do I pay the HST? Is it on closing date? What taxes most likely already embeded in the purchase price? Is it the 5%GST and 2%PST?

Im sorry if it sounds stupid, but I'm so new at this.

Thanks in advance.

 

[AKS]

i'm a new home buyer. I signed a purchase agreement on July 16,2009 for a pre-construction condo. The purchase price is $282,400. My question is, has the GST portion (5%) and the PST (8%) already embeded in the purchase price? Or, will I have to pay 13% HST? When do I pay the HST? Is it on closing date? What taxes most likely already embeded in the purchase price? Is it the 5%GST and 2%PST?

Im sorry if it sounds stupid, but I'm so new at this.

Thanks in advance.

The HST is not "officially" implemented yet. It will start on July 2010. So it's doubtful that HST is already added to your purchase price. On closing, the taxes should be adjusted. You should be currently charged for GST (5%) and 2% PST is built into your purchase price already (builder passes onto you the taxes they paid). So you will need to pay 8% PST during closing. But with adjustments, you should only need to pay 2% PST. However, theoretically the builder should then reimburse you the 2% PST they charged. So there won't be any differences in taxation for purchases under 400k.

 

[newbuyer]

The HST is not "officially" implemented yet. It will start on July 2010. So it's doubtful that HST is already added to your purchase price. On closing, the taxes should be adjusted. You should be currently charged for GST (5%) and 2% PST is built into your purchase price already (builder passes onto you the taxes they paid). So you will need to pay 8% PST during closing. But with adjustments, you should only need to pay 2% PST. However, theoretically the builder should then reimburse you the 2% PST they charged. So there won't be any differences in taxation for purchases under 400k.

Do I need to pay the 8% first or will it be adjusted right away upon closing? To be honest with you, I won't have that $20k extra to pay for tax on top of closing fees by the closing date. Is there any other way?

 

[AKS]

Do I need to pay the 8% first or will it be adjusted right away upon closing? To be honest with you, I won't have that $20k extra to pay for tax on top of closing fees by the closing date. Is there any other way?

Sorry, I don't know. You will have to wait and see. The only reference I can give you is how they handled the GST. When I bought my condo, GST was 7%. During my occupancy, GST was down to 6%. The 7% was already added to my unit. So I had to file for 1% GST back when I closed the unit.

One thing you might want to do is ask the developer if they included in the HST to your unit. I doubt they have, but who knows. If it's added already, it can be towards your advantage as you will be getting the HST credit back.

 

[newbuyer]

Sorry, I don't know. You will have to wait and see. The only reference I can give you is how they handled the GST. When I bought my condo, GST was 7%. During my occupancy, GST was down to 6%. The 7% was already added to my unit. So I had to file for 1% GST back when I closed the unit.

One thing you might want to do is ask the developer if they included in the HST to your unit. I doubt they have, but who knows. If it's added already, it can be towards your advantage as you will be getting the HST credit back.

I checked the price list, and it says GST included. Do they usually disclose the 2% on the pricing list as well? Or, is it something that understood already by public?

 

[AKS]

I checked the price list, and it says GST included. Do they usually disclose the 2% on the pricing list as well? Or, is it something that understood already by public?

It's not disclosed. It's something understood by the public. Whatever costs are incurred by the builder will be shouldered by the buyer. The builder is out to make money, not charity. They estimate the costs to build the condo, promotions, property taxes, development fees, cost of land purchase, etc. Then they have to take into account the amount of profit they can earn from selling units. Hence the rising costs in pre-constructions. Getting 2% PST back as adjustment from the builder is at their discretion. The 2%, I think is on material fee or whatever fee is paid that requires PST and not on the full amount of your purchase price. I could be wrong, but PST is not paid by the builder on everything (eg. profits).

 

[newbuyer]

It's not disclosed. It's something understood by the public. Whatever costs are incurred by the builder will be shouldered by the buyer. The builder is out to make money, not charity. They estimate the costs to build the condo, promotions, property taxes, development fees, cost of land purchase, etc. Then they have to take into account the amount of profit they can earn from selling units. Hence the rising costs in pre-constructions. Getting 2% PST back as adjustment from the builder is at their discretion. The 2%, I think is on material fee or whatever fee is paid that requires PST and not on the full amount of your purchase price. I could be wrong, but PST is not paid by the builder on everything (eg. profits).

is getting $15,000 cash back could be consider getting 2% PST back? Well, the $15k is more like 5% discount on the purchase price.

If not, can I ask my lawyer to claim the 2% back on closing?

 

[Hank]

is getting $15,000 cash back could be consider getting 2% PST back? Well, the $15k is more like 5% discount on the purchase price.

If not, can I ask my lawyer to claim the 2% back on closing?

As far as I know, you don't have any right to that 2%, so it's not really something you can claim back. The 2% is an estimate of how much PST has been built into the price of a new house; the government is only giving a 6% rebate on the first $400,000 because they assume that builders will take care of the other 2% by lowering their prices by that amount (to remain competitive in the marketplace). There's nothing to force them to do that, though. If you've already signed an agreement to pay a certain amount, I doubt they'll give you 2% of that back if they don't have to.

 

[newbuyer]

As far as I know, you don't have any right to that 2%, so it's not really something you can claim back. The 2% is an estimate of how much PST has been built into the price of a new house; the government is only giving a 6% rebate on the first $400,000 because they assume that builders will take care of the other 2% by lowering their prices by that amount (to remain competitive in the marketplace). There's nothing to force them to do that, though. If you've already signed an agreement to pay a certain amount, I doubt they'll give you 2% of that back if they don't have to.

Hank, regarding that 6% rebates, do you have to pay the full amount 13% first and then they mail you a chq rebate, or is it something that my lawyer have to file for the rebate on the time of closing so I don't have to pay for the 6% in the first place? Some website say all new homes under $400k are exempt. Some says that you get 75% rebate on the single tax PST. Which one is the right one? Where can I get reliable information? Even the CRA website does not explain the process in detail. Is the policy still being improved?

 

[Hank]

Hank, regarding that 6% rebates, do you have to pay the full amount 13% first and then they mail you a chq rebate, or is it something that my lawyer have to file for the rebate on the time of closing so I don't have to pay for the 6% in the first place? Some website people says all new homes under $400k are exempt. Some says that you get 75% rebate on the single tax PST. Which one is the right one? Where can I get reliable information? Even the CRA website does not explain the process in detail. Is the policy still being improved?

I'm not sure of the exact details of how the 6% rebate will work; I'm not sure that the details have been announced yet, actually.

 

[MuchoGrande]

What a complete mess! Reading the posts above it is clear how confusing the HST to people. The province should be assisting in providing clear guidance to buyers as to how this will impact them. This has been a mess from the start -- I feel bad for homebuyers, may of whom are doing it for the first time (buying a house that is). The phase-in is complicated, no one seems to know what is going on and we're talking big bucks to the average buyer.
3% LTT in the City, HST, increased DCs all add up to a P in the A (pain in the arse). Shouldn't we be encouraging homeownership not putting up more barriers?