The Ontario provincial government announced proposed the Harmonized Sales Tax in 2009. This merges the 5% GST with the 8% PST into a new 13% HST. The purchase of a new home is subject to only the 5% GST, so needless to say the harmonized tax cause some concern amongst Ontario residents interested in purchasing a home in the future. In an effort to smooth out the transition period from the separate taxes to the HST system, the Ontario government proposed new home HST rebates. The original HST rebates proposed were adjusted on June 18, 2009. This update meant that new homes purchased as primary residences would quality for an HST rebate up to $24,000. The rebate is relative to the cost of the home – the rebate is incremental up to the $500,000 point. At that point, home buyers have reached the maximum allowable HST rebate.

This means the cost of homes above $500,000 will be more expensive post-HST, which has a number of people concerned. The government is quick to point out that the average price of a home in Ontario is under $500,000, but that’s not the case in most of the Greater Toronto Area.

To learn more about the details of the real estate HST rebates in Ontario, visit KPMG.ca or the Ontario Ministry of Revenue