The Harmonized Sales Tax (HST) will come into effect in July, 2010, combining the 5% GST and 8% PST into one 13% sales tax. The HST will apply to new homes and to all home closing costs, creating and costing you thousands of dollars more in taxes.

THINKING OF BUYING? How will this affect you?

Currently, new homes are exempt from PST. Under the HST, new homes worth less than $400,000 will qualify for a 6% tax rebate, but new homes worth more than $500,000 will be subject to an additional 8% tax. That's an additional $30,000 on a $500,000 home.

Also, your closing costs for such services from home inspectors, lawyers, moving and real estate commissions will be subject to the HST, instead of the current 5% for GST. This can add approx. $2000 in addition to your closing costs.

THINKING OF SELLING? How will this affect you?

As with buying real estate, your closing costs for such services from contractors, renovation, surveys, lawyers, moving and real estate commissions will be subject to the HST.

The Toronto Real Estate market in May of this year is looking up, with GTA housing sales up almost 2% from May 2008. Interest rates are at an all time low and in many instances owning a home is cheaper than renting!

Whether you are in the market to buy or sell, consider the costs associated with the upcoming Harmonized Sales Tax in July 2010. You don't want to be caught scrambling next year with everyone else before the HST is rolled out.

* Source: Emily Senger, National Post, May 20, 2009 | Toronto Real Estate Board