What is the HST?
The Harmonized Sales Tax (HST) is the harmonized value-added tax that will replace the federal Goods and Services Tax (GST) and Provincial Sales Taxes (PSTs) in Ontario on July 1, 2010.
The HST will apply at a rate of 13% in Ontario to taxable property (includes goods, intangible personal property such as licensed software, and real property) and services.
In other words, the PST will be eliminated and an 8% provincial rate will be added to the 5% GST. This combined tax at the rate of 13% in Ontario will be called the HST.
What is the general impact of HST on real estate transactions?
The HST treatment of real estate transactions will generally follow the current GST treatment of real estate transactions.
Sales of new residential housing will be subject to HST and will qualify for GST, HST, and transitional rebates (subject to certain thresholds and maximum amounts).
On the other hand, sales of used residential housing and long-term rentals of residential housing will be exempt for HST purposes.