How will the HST Transition effect new homes and selling commissions?
How will the HST Transition effect new homes and selling commissions?
On most transactions the 7% GST or HST (soon to be 12% as of July 1, 2010) is paid at the moment of purchase. What happens when the purchase takes place over a period of time as is often the case when purchasing real estate? Although not officially passed as yet, there is a two stage transitional proposal. A declaration will be made stating how much work has been accomplished by July 1, 2010. For example, your home is listed for sale today in May, and an offer is accepted to buy it with completion and possession dates set for July 15th. The seller then pays a blend of both GST and HST. Say the Realtor did 90% of the work to market and sell your home before July 1, then the GST is payable on 90% of the commission, and HST is payable on the remaining 10%. Likely the same will be the case with new construction. Builders will have to declare how much work they have done to build the home as of July 1, and the purchaser will pay a blend of GST and HST, based on the percentage of work completed as of July 1, 2010.
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