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GST Reduction Announced

A reduction in the GST from six to five percent was announced by the Federal Government, on October 30th, 2007.  With regard to the purchase price of Residential properties, GST only applies to sales of newly constructed and substantially renovated homes.  GST is not applied to the purchase price of Resale Homes.  The reduced rate will become effective on January 1st, 2008; however, the reduced rate will apply to the purchase price of New Homes immediately, subject to transitional rules detailed below.

PURCHASE PRICE OF NEW HOMES
Ownership or possession transferred before January 1st, 2008: Generally, the six percent rate will apply if ownership of the property, or possession of it under the Agreement of Purchase and Sale, is transferred to the Buyer before January 1st, 2008.

Ownership and possession transferred on or after January 1st, 2008: The five percent rate will apply if both ownership of the property and possession of it under the agreement are transferred to the Buyer on or after January 1st, 2008.

Sales of New Housing under written agreements entered into on or before October 30th, 2007 where both ownership and possession transferred on or after January 1st, 2008, the following rules apply:
  • Agreements of Purchase and Sale entered into on or before October 30th, 2007, but after May 2nd, 2006, the six percent rate will apply.
  • Agreements of Purchase and Sale entered into on or before May 2nd, 2006, the seven percent rate will apply.
• In both of these circumstances, the Purchaser will be entitled to file a claim directly with the Canada Revenue Agency to be paid a Transitional Rebate that reflects the GST rate reduction to five percent, net of any corresponding rebate adjustment.

*This article was provided by the Toronto Real Estate Board*
Posted on Monday, December 3, 2007 at 02:17AM by Registered CommenterElaine | CommentsPost a Comment

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