Death and taxes are said to be the only two sure things in life, and in Canada we are very familiar with the latter of those two. The social programs that many say define us as a country call for some significant charges on citizens in the form of taxes, one of which is the much maligned Goods and Services Tax.
The GST is not just hated because it is another tax, but because of the ambiguity with which it is charged. Not many people are really sure when they will need to pay the GST on a purchase, although for the most part we take it for granted that we will have to pay it.
For new homeowners, the subject of the GST is particularly touchy. No matter what percentage of a tax is applied to a new home, it can add up to a substantial amount of additional money. Let's take a look at where you need to factor in GST when you buy a new condo.
You will pay GST when...
The rules about GST in application to the purchase of condominiums are fairly specific. Those who purchase new homes or homes that have seen extensive renovations can expect to pay this tax. Please note that new homes is not a term relative to the buyer; it specifically deals with condos that have been newly constructed.
But don't forget!
If you are dancing in front of your computer screen in joy because you realize you don't have to pay the GST on your home purchase, as the condo is not considered new, do not think that you are off totally free. The GST is also added to many of the services you will need in order to take possession, including lawyer's fees, processing fees, and as part of your house insurance. That means that everyone will have to pay, and new condo owners in particular will pay a lot of GST when it is all added up.
Some good news
There is some good news for new homeowners and for everyone in Canada on the GST front. The federal government recently announced that it would be cutting the GST by one percent, down now to 5% of the total purchase cost, effective January 1 2008. While the average person might gripe that a one percent slash is not much, it certainly can add up when a major purchase such as a new home is considered; that can mean a savings of $3000 for the average Canadian home!
Taxes are inevitable, and if you are buying a new condo you need to be aware of the additional costs added due to the GST both on the purchase and transactions for the purchase of your home.
