Things You Should Know About HST

Theresa’s Soap Box – Things You Should Know About HST

HST has caused quite the disturbance recently.  A lot of people are really worried and very concerned about this issue.   Since HST has been around for a while now, we thought we’d take the time to address some popular concerns that we’ve come across regarding the HST.

We’re going to begin by clearing up some concerns of HST without going into too many details, like how the HST rebate is assigned.  What we are discussing will be very basic.

12% on your entire purchase price?

We’ve had a lot of people concerned that they would be required to pay 12% on top of their entire purchase price and they were not buying a home that was brand new.

Here’s the thing, you don’t pay HST on every single property transaction.   HST only applies if you’re buying a brand new home or something that has been substantially renovated and that it is being sold like new.   In the case of a heavily renovated property you do pay HST because they’ve put in the work to rebuild and restore the property etc.

If you’re buying a house being sold by somebody else, that has already been owned and lived in, then there is NO HST applicable.

HST on to your mortgage

Unlike your lawyer fee or your property transfer tax, HST can actually be added to your mortgage amount.  This is good because you won’t be require to pay, what probably might be tens and thousands of dollars, out of pocket.

Even better, you can negotiate to have your HST included on your purchase agreement (contract purchase price).  In some areas this is standard and in other areas it is not.  Always make sure to look at your contract and see if the contract price includes HST or negotiate to have that included so you don’t have to add in that extra cost for yourself.

If you have any questions on employment history and mortgages, feel free to call us at 1-866-521-9557 or email at mortgage@suttonmember.com.

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4 Responses to Things You Should Know About HST

  1. Karen says:

    Hi if I m selling my home it is an older home what do I pay HST on
    Thanks Karen
    karenlofstrom@hotmail.com

    • admin says:

      Hi Karen,

      If you’re selling your home, you do not have to pay HST on the home itself. However, you do have to pay HST on services you receive, such as Realtor’s commission, lawyer or notary fees, costs of clearing title, etc. If in doubt, please seek advice from your accountant or lawyer. Give us a quick call if you have any other questions. Thanks.

      Theresa.

  2. Jasmin says:

    Hi
    Scenario:
    You purchase a new home with HST included in the price. The mortgage is for the full amount of the house including HST on top. The contract states that the buyer will receive the HST rebate of $26,250. Is this okay? Will the lender allow the buyer to receive the rebate from the CRA when they loaned the buyer the entire HST amount? Will the lender loan the entire purchase or will they deduct the rebate from the mortgage amount?

    Thanks
    Jasmin

    • Theresa Shaw says:

      Hi Jasmin!
      It’s best to confirm on the contract if the HST included in the purchase price is the the net HST or the full HST. In all of the deals I’ve come across it is always the net HST, meaning that the developer already knows how much rebate you would get, and when they add to the purchase price they only add on the “after rebate” HST amount. In this way there’s no issue with your mortgage application because you would not be borrowing extra money at the beginning and getting a rebate later on. Let us know if this helps and if this is not how your contract is written we’ll get an answer for you as well!
      Best regards,
      Theresa

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