[Hydrogen]

I've already said that exempting the first $400k for all new homes makes more sense (or exempting nothing at all). Most of the arguments seem to be that the HST will destroy the new housing market, which is of course absurd.

It grossly affects the housing market of downtown Toronto. It's fine for someone living in the suburbs to casually give a pass to this tax, but the reality is quite different elsewhere. Earlier in this thread, you misperceived this tax as one on the wealthy. The reality is that a majority new middle class homes in and around downtown Toronto can easily be priced at $400,000 and above.

 

[AKS]

Logically speaking, the condo is already charged GST. Before the GST was decreased, the purchasers of pre-construction got a GST adjustment (money back for the GST difference paid). However currently the ones up already paid GST. The harmonized tax is called HST. If they've already paid GST and the hidden 2% PST, why do they have to pay HST? So I think it should be implemented for contracts after July 2010.

This post mentions about trying to remove the Toronto Land Transfer Tax which I think might help Toronto RE a bit. People in Toronto seem to be taxed to death RE. First the TLTT now the HST. http://www.torontocondomarket.com/

 

[Eug]

Logically speaking, the condo is already charged GST. Before the GST was decreased, the purchasers of pre-construction got a GST adjustment (money back for the GST difference paid). However currently the ones up already paid GST. The harmonized tax is called HST. If they've already paid GST and the hidden 2% PST, why do they have to pay HST? So I think it should be implemented for contracts after July 2010.[/url]

That makes sense, but who knows... Lots of things around the new taxes don't make sense.

Also, I will point out that when the GST was implemented, store stock was not given a reprieve. When the GST went into effect, stores kept the prices constant and charged the GST on top of that. The government didn't give them or the manufacturers back the MST the stores had already paid on the wholesale items.

 

[Hank]

Why do people keep saying this? The government has already given us their plan. We can lobby for them to change it, but don't count on it. In fact, they could do just the opposite. After a certain time, they will want to reduce the exempted amount so that even more HST will be charged on new homes.

I hope that they change their implementation policy with respect to homes, but I'm not basing my support of the HST on this change. If the choice is between the status quo and an HST that contains the current flawed implementation strategy, I'll still choose the HST because I still think it's necessary for the province in the long run.

 

[AKS]

What's good for the province in the long run is to remove those unions

 

[Mike in TO]

Why HST is a significant problem as it applies to new housing

A key issue no one has mentioned is the impacts on employment. The country and province are spending billions bailing out the auto sector, while significantly increasing taxes on new homes and residential renovations.

There are 365,000 people employed in the residential construction industry across Ontario - this is a much higher number than the automotive sector. By increasing taxes and creating a situation in which re-sale homes are taxed at a much lower rate than new, the market will be further shifted to re-sale which will have significant impacts on jobs.

Another reason why the shift to re-sale runs counter to provincial policy objectives is intensification and energy conservation. Even new homes built to minimum OBC standards (let alone the thousands built to LEED, EnergyStar or GreenHouse standards) are far far more energy efficient than homes built even just a couple of decades ago. A significant shift by consumers away from new housing will have repercussions on future energy consumption and conservation efforts. The province is also trying to reduce sprawl and encourage intensification - the HST and the rebate structure is wrong headed in its application on new housing as purchasers moving to urbanized areas with higher land values will be penalized, whereas those moving to the suburban fringe or rural areas will largely avoid the tax. This will have long-term implications for the type of growth that occurs.

Also it has been questioned in this thread as to why new homes should be taxed any differently than other products. Housing is different - it is a basic element that all people need a roof over their head and it is often the single largest investment any individual will make... shelter & investment. Secondly it is the only product that consumers purchase that continues to pay a stream of tax revenue (property taxes) for the entire life cycle of the product. Clearly housing is different than other products and it should be treated differently in terms of tax policy.

 

[afransen]

People need clothes, dental care, etc. all of which are taxed. The killer blow of course is that new homes are ALREADY taxed by PST built into the purchase price.

 

[ididthat]

I was thinking about this and thought that maybe someone else has considered this too. We as home-buyers, owners, and potential purchasers have legitimate concern on how this HST is going to affect them, the new developments, and the people building these projects. What I wonder though is, has anyone thought about how this is going to impact the commercial and industrial business in this province. What I mean is that when this tax comes in, we will be paying for it on everything...Twice... As if we are not taxed enough, these organizations will no longer have tax exemption status like they do now, so they will have to pay, roll the increase into the price and then up our rate of payment. Therefore, we will be paying increased taxes on the additional taxes. Additionally, what about these businesses that are relocating to the 905? When they move, generally they build new buildings. Of those, I would imagine that the large majority will be over $400,000. Therefore we will be getting hit again with another increase in costs. I say that as I am yet to see a company not try to pass on their capital costs on to the consumer.

As for the impact on housing, I believe that areas outside of the 416 will see a larger hit from this and it could be useful to decrease urban sprawl. But as I said earlier, I do have great concerns for those communities in the 416 that are trying to regain sustainable and strong communities.

 

[Johnzz]

As for the impact on housing, I believe that areas outside of the 416 will see a larger hit from this and it could be useful to decrease urban sprawl.

???

 

[ididthat]

I'm sorry Johnzz, I do not understand the meaning of your ???.

I thought that that part of my post was understandable, but I would be glad to explain my point further.

At the present time, the majority of new construction that consists of housing which exceed $400,000 are in the new home market, not the condo market. Although there are a lot of condos being built, it is the options that push them close to or over the $400,000 marker, not the starting price in the high $300,000's or low $400,000's that new homes have. In saying that, I realize that I might have contradicted myself from earlier postings. Now considering that Toronto itself has limited options for new home (not condo) construction, most of the areas where such building is occurring is in the 905 (as it has been for many years now). Therefore, it is reasonable to believe that those home purchasers will be paying this tax more often than a purchaser in Toronto. The cause and effect aspect of this issue is that if purchasers will have to pay an additional 6% on the cost of their new home, it should have the same purchasers thinking about resale properties instead. If they then choose the resale option, it would thus result in new build sales in the 905 region slowing. Therefore, as a result of this tax, less new home purchases should = less new builds, which should = less urban sprawl.

Did that help clarify my thought process or just skew yours some more? I understand that it is quite possible for this scenario not to happen as described, however, I believe that there may be some sound logic in my thinking on this issue.

 

[AKS]

new homes doesn't mean a detached house. It also means new condos and townhouses being built. There are still construction going on in the 416 area. Just not detached houses. Condos and townhouses in the 416 cost more than 905. Looking at the pre-construction and currently constructed homes, prices are at $366-400+ psf. One cole starting at 366 psf and west harbour city at 386 psf townhomes. Condo units are ranging from $350-1000+ psf in Toronto. For preconstruction I notice from 905, they're under $250 psf for houses I think. How does that encourage people to buy houses in 416 compared to 905? Unless you assume everyone will buy resale instead of new construction.

If you think people won't buy new homes from 905, you think they will buy in 416? Or people just won't buy new homes at all?

 

[Johnzz]

Yes, I was only questioning whether the new HST would have a greater impact outside central Toronto vs inside. Do more $400k+ new houses/condos sell in the 905 vs the 416? I haven't seen the official stats but I would hazard a guess that the 416 region sell many many more units above $400K. Why else would people move out to the burbs (urban sprawl)?

 

[ididthat]

I think AKS makes a very valid point to the ppsf.

I agree that overall, the condo market has a much higher ratio, however the new home (single detached, semi detached, and town home) market generally has properties that are 2 times or greater in size. What I mean is that you may pay $350,000 for a 700 sq.ft condo in downtown Toronto, or you may pay $350,000 for a 1400 - 1750 sq.ft town home outside Toronto (for ease of calculations they are simple numbers). Yes, you pay the same, but your ppsf clearly drops from $500/sf to $250/sf or less. So your point is that condos in the 416 cost more. Yes! But only in a price per square foot matter. I seriously doubt that the person looking at the 2500 sq.ft condo cares about the potential additional 6% tacked onto the cost of the multi-million dollar property in the heart of Toronto, but I would bet that the family thinking about purchasing a 2500 sq.ft detached home at $500,000 in the 905 is going to care when it costs them an additional 6%. It is a matter of difference in the markets and mentalities.

I do not think it will stop most of them but is it unreasonable to think that about 10% of the market looking at new will go to resale instead? I believe that it will at least have people stop and think about the purchases prior to signing on the dotted line.

With the Ontario new housing market down 61% in April alone and at a 41% decline ytd on new-construction starts, a 10% loss to the resale market means a further reduction of approximately 275 units in the GTA alone. When looking at the big picture, that sort of trending should lend itself to a slowing in the sprawl that I was talking about.

I am not saying that the 416 market will not see the tax man, but for those looking in the both the 416 and 905, resale becomes a much more attractive option.

Also, for clarification, to me housing is the umbrella term for all types of dwellings. A condo is, well a condo, and a home is a single detached, semi detached, town, etc. Your definitions might be different than mine, but I believe that mine are fairly close to market terminology.

 

[Riverdale Rink Rat]

The whole point is to provide relief & consistency for businesses

What I wonder though is, has anyone thought about how this is going to impact the commercial and industrial business in this province. What I mean is that when this tax comes in, we will be paying for it on everything...Twice... As if we are not taxed enough, these organizations will no longer have tax exemption status like they do now, so they will have to pay, roll the increase into the price and then up our rate of payment. Therefore, we will be paying increased taxes on the additional taxes.

Additionally, what about these businesses that are relocating to the 905? When they move, generally they build new buildings. Of those, I would imagine that the large majority will be over $400,000. Therefore we will be getting hit again with another increase in costs. I say that as I am yet to see a company not try to pass on their capital costs on to the consumer.

If you are a small business owner, you have a GST number. When you purchase something for your business, you show your number to the seller and they don't charge you GST. The same will happen for HST. I'm not old enough to remember any MST to GST switching issues, but for small businesses, HST will be less paperwork and less taxes. It'll be a more consistent tax.

Businesses need to make a profit after costs, including capital costs, or they go bankrupt. IMHO, though, your blowing smoke out your butt. You've no idea what the capital costs are for any business, with the exception of a utility like Toronto Hydro, and even then those figures on our bills are probably bogus.

 

[spider]

GST exemption

If you are a small business owner, you have a GST number. When you purchase something for your business, you show your number to the seller and they don't charge you GST. The same will happen for HST.

The exemption to which you refer is on the PST, not the GST. Everyone at every level in the supply chain pays the GST on their purchases and collects the GST on their sales. When they pay the government their collections they deduct the tax they paid. I presume the HST will be handled the same way.