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Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

January 12th - 2008

GST cut good for new homebuyers and homeowners

The tax changes outlined in the federal government’s economic statement will bring significant savings to new homebuyers, but will also benefit existing homeowners.

The tax changes outlined in the federal government’s economic statement will bring significant savings to new homebuyers, but will also benefit existing homeowners. According to government calculations, the reduction in the GST rate from seven per cent to five per cent will save a family purchasing a new $250,000 home $3,200 in GST. Half of that amount is from the reduction in the GST rate from six per cent to five per cent.

To keep new homebuyers from waiting until January to purchase a home and take advantage of the lower GST rate, the federal government made the reduction effective immediately, on new homes only, when it announced the tax cut at the end of October.

Buyers who purchased after May 2, 2006, but on or before Oct. 30, 2007, will pay six per cent GST, but get a one per cent transitional rebate (less GST new housing rebate adjustment) as long as ownership and possession are transferred after Jan. 1, 2008.

Home buyers who purchased on or before the previous GST rate cut from seven per cent to six per cent (May 2, 2006) will have to pay seven per cent GST, but will get a two per cent transitional rebate (less GST new housing rebate adjustment) from Ottawa, again providing ownership and possession are transferred after Jan. 1, 2008.

Existing homeowners
New homebuyers may see the biggest savings, however, when the new one per cent reduction in the GST takes effect in January 2008, it will also help existing homeowners to pay for home renovations, new appliances or furniture. The federal government claims that Canadians spend an average of $7,475 on renovations when they buy a home, and spend another $3,950 on furniture and appliances. Based on these figures, the GST cut represents $114 in savings.

The Canadian Home Builders Association offer the following guidelines for home renovations and how the GST is applied.

  • Renovations done before or after January 1, 2008, but invoiced on or after that date will qualify for the five per cent GST rate.
  • For renovations done and invoiced January 1, 2008, but subject to a down payment before January 1, six per cent GST will be collected on the down payment and five per cent on the rest of the fee.
  • For renovations done after January l, 2008, but subject to a deposit paid before January 1, the five per cent rate applies. A deposit is not treated as a payment for a supply of goods or services until the supplier applies it against the consideration payable for the supply.

For further information on the new GST reduction and transitional rebates, visit www.cra-arc.gc.ca.

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For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Senior Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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