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Home buyers wrongly believe HST applies to resales: survey

OTTAWA — Real estate agents in Ontario fear their business is being hurt largely by the misguided belief a new sales tax applies to previously owned homes.
A survey done by Ipsos Reid, commissioned by the Ontario Real Estate Association, shows 56 per cent of people in Ontario think the harmonized sales tax, implemented in July, applies to the cost of a resale home.

Ontario and British Columbia both implemented HSTs at the same time.
For many goods, it simply combines the provincial and federal rates of sales tax. But for many other products and services, it added a sales tax where none previously existed.

OREA points out that with an average resale home price of $333,000 in Ontario, most residents wrongly expect to pay another $40,000 in sales tax if they were to buy a home of that value. But the HST is only levied on the various transaction fees associated with the purchase of a home that has been previously occupied.

"Clearly, Ontarians still don't know what the HST covers and what is exempt," said OREA president Dorothy Mason. "This is not helping the housing market, and it's not helping the Ontario economy. This confusion means that many buyers think the cost of a resale home is tens of thousands of dollars higher than it actually is."

"We're doing our part to inform our clients, but we shouldn't have to do it alone. We're calling on the Ontario government to launch an immediate public awareness campaign to educate taxpayers and end the HST confusion."

The survey was taken of 830 Ontario residents between Oct. 4 and 11.

The results are considered representative of the population within 3.8 percentage points, 19 times of 20.

The new HST in Ontario and British Columbia has been widely cited by real estate professionals and analysts for contributing to a slowdown in housing sales, along with tighter mortgage regulations and expectations — which have since dampened — that interest rates were on the verge of a sharp turn upward.

Source Postmedia News
By Derek Abma