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Sales Tax Harmonization
Issue
Currently, services associated with a real estate transaction pay only 5 percent federal Goods and Services
Tax (GST). A harmonized sales tax (HST) will result in the 8 per cent Provincial Sales Tax (PST) being levied
on a variety of real estate related services, including legal fees, commissions and home inspections which
are currently exempt.
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HST and the Average MLS® Ontario Home
($318,366)
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Taxable Service
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Current Tax
Payable
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HST
Payable
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New
Taxes
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Legal Costs
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$50.00
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$130.00
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$80.00
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Sample Real Estate Commission1
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$796.00
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$2,069.00
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$1,273.00
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Home Inspection
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$20.00
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$52.00
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$32.00
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Moving Costs
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$50.00
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$130.00
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$80.00
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Home Appraisal
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$15.00
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$39.00
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$24.00
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Mandatory Home Energy Audit
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$15.00
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$39.00
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$24.00
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Total New Tax:
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$1,513.00
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For the average Ontario home on the Multiple Listing Service (MLS®) priced at
$318,366 a HST will add $1513.00 in new taxes to closing costs. The HST will add an
estimated $310 million in new taxes to 2010 residential resale real estate
transactions.2
A HST will also hurt the affordability of homeownership by adding hundreds, potentially
thousands of dollars in new taxes to home carrying costs. Under sales tax harmonization, home owners can
expect to pay 8% more on utilities such as gas, electricity and home heating fuel, home renovation labour,
the cost of lawn upkeep or landscaping and the cost of snow removal.
Current Status
The Government of Ontario and the Government of Canada have both passed legislation that will implement the
Harmonized Sales Tax (HST).
The HST will come into force on July 1, 2010.
OREA Position
OREA opposes any system of harmonized sales taxation because it will hurt the affordability of housing. New
and resale home transactions will face significantly more tax under a HST system.
1Based on 5% commission example; note that all commissions are negotiable.
2The Canadian Real Estate Association estimates that Ontario MLS®
sales in 2010 will number 200,400 with an average selling price of $326,800. OREA estimates that the HST on
these transactions will be $1547.20.
Updated: February 11, 2010
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