GTA and Mississauga Average Price Graph

You are here: 
Read more about investment properties

Click for larger graph of Toronto CMA Housing Starts

GST and Real Estate

 
When you buy a newly constructed home, condominium or town home, the entire purchase price including land is taxable. If the property is to be rented to tenants, the full 7% GST is charged on the purchase price. However, if the home is going to be your primary place of residence, it may qualify for a partial GST rebate, depending upon the sale price.

For homes costing $350,000 or less, you will receive a rebate of 36% of the GST paid, to a maximum of $8,750. That means you pay approximately 4.5% GST (not 7%) on the purchase price.

Canadian Real Estate Association LogoReal Estate Helpful Articles and Advice

Example #1
You buy a new home for $150,000. The 7% GST is $10,500, less a 36% rebate of $3,780. So, you pay $6,720 is GST.

1) $150,000 x 7% = $10,500
2) $10,500 x 36% = $3,780
3) $10,500 - $3,780 = $6,720
The maximum rebate is $8,750. The rebate for new homes costing between $350,000 and $450,000 declines to zero on a proportional basis, using this formula:

Rebate = $8,750 x ($450,000 - Selling Price) / $100,000
Example #2
You buy a new home for $400,000. Your GST rebate is $4,375, and the total GST owed is $23,635.

1) $400,000 x 7% = $28,000 (GST)
2) $8,750 x ($450,000 - 400,000) / $100,000 = $4,375 (GST rebate)
3) $28,000 - $4,375 = $23,635 (total GST owed)

New homes selling for $450,000 or more do not qualify for a GST rebate.

If you buy a substantially renovated home from a builder who supplies both the land and the house as a single transaction, the same GST rebate conditions described above apply. Your REALTOR can explain how the Federal Government defines "substantially renovated."

GST and Land
Buyers who purchase land separately may have to pay GST on the sale price depending on the previous use of the land. When you build a new home on your land, then you will pay GST on the construction costs of the house, less nay applicable rebate.

The rebate would be the same as for a new home. That is, when the total value of the land and home is $350,000 or less, the rebate would be 35% of the GST paid on the building and the land to a maximum of $8,750.

When the total value of the land and house exceeds $350,000 but is less than $450,000, a proportional formula for calculating the GST rebate applies.

As with other new home purchases, GST rebates are not available for land and buildings valued at $450,000 or more when you build a house on your lot.

please note the above figures use 7% and since the GST was changed to 6% these caclulations may change, please consult your solicitor before using these calculations to ensure accuracy

Daily New MLS ListingsHouses for Sale

This series of articles is brought to you by A. Mark Argentino and other real estate related resources, including Canadian Real Estate Association CREA and the Ontario Real Estate Association OREA.

Back to list of Real Estate Helpful Articles

 


Whether you are interested in a Power of Sale Property, a Foreclosure Sale or a regular property purchase, I can assist you with all of the complexities when you purchase or sell your next property.  Please don't hesitate to email me

If you have any questions or require further information, please send me an email.

Thank you,
See Power of Sale Properties Mark Argentino

Read about Power of Sale, Bank Sales and Foreclosure Properties FAQ's

Read a very detailed section about Power of Sale and Foreclosure

or go back to list of Real Estate Helpful Articles

Page copy protected against web site content infringement by Copyscape

Excellent, I am ready to begin my home search   Read more about investment properties

 


REMAX Mississauga Real Estate NewsletterReal Estate Market Watch Newsletter

Why Subscribe?  You will receive valuable Real Estate information on a monthly basis - such as: where to find the 'best' mortgage interest rates, Power of Sale properties and graphs of current house price trends.  Plus, you will pick up ideas, suggestions and excellent real estate advice when you sell or buy your next home. Read Past Newsletters before you decide  Privacy-Policy
Your e-mail:

Mississauga MLS Real Estate Properties & MLS.CA Homes for Sale  | All Pages including Mississauga Real Estate Blog all maintained by info@mississauga4sale.com Copyright © A. Mark Argentino, P.Eng., Broker, RE/MAX Realty Specialists Inc., Brokerage, Mississauga, Ontario, Canada L5M 7A1 (905) 828-3434  Google  First created - Tuesday, July 16th, 1996 at 3:48:41 PM -
Last Update of this website: Saturday, October 18, 2014 1:00 AM
At this Mississauga, (Erin Mills, Churchill Meadows, Sawmill Valley, Credit Mills and or Meadowvale ) Ontario, Canada Real Estate Property Internet web site you will find relevant information to help you and your family.

| Complimentary & Quick Over The Internet Home Evaluation |
Top of Page - Mississauga homes for sale, properties for sale and valuable information regarding the City of Mississauga, Ontario