Calculating Hst on New Houses in Ontario

When purchasing a new home in Ontario, understanding how the Harmonized Sales Tax (HST) applies is crucial for budgeting. This guide explains how to calculate HST on new houses in Ontario, including the current tax rate and how it affects your purchase price.

What is HST?

The Harmonized Sales Tax (HST) is a combined sales tax and Goods and Services Tax (GST) that applies to most goods and services in Ontario. It replaced the previous system of provincial sales tax and federal GST in 2010. The current HST rate in Ontario is 13%.

The HST rate in Ontario is currently 13%. This rate applies to most new residential properties sold in Ontario.

HST is calculated as a percentage of the purchase price of the property. It's important to factor this into your budget when buying a new home to understand the total cost of ownership.

How HST Applies to New Homes

When purchasing a new home in Ontario, the HST applies to the total purchase price of the home. This includes the base price of the home plus any additional costs such as land transfer taxes, legal fees, and other closing costs.

The HST is typically included in the final purchase price quoted by the builder or real estate agent. However, it's important to understand how much of the total price is the actual home value versus the HST portion.

HST Amount = Purchase Price × HST Rate

Where HST Rate is currently 13% (0.13) in Ontario.

Some builders may offer HST-free sales, but these are less common and typically only available for certain types of properties or under specific circumstances.

Calculating HST on New Houses

To calculate the HST on a new home in Ontario, you'll need the total purchase price of the home. This price should be the final amount you'll pay, including all fees and taxes. The calculation is straightforward:

Determine the total purchase price of the new home.
Multiply the purchase price by the current HST rate (13%).
The result is the amount of HST you'll pay on the home.

You can use our calculator on the right to perform this calculation quickly and easily.

Remember that the HST amount is in addition to the base price of the home. The total cost of the home will be the purchase price plus the HST amount.

Example Calculation

Let's look at an example to illustrate how to calculate HST on a new home in Ontario.

Scenario: You're purchasing a new home in Ontario with a total purchase price of $500,000.

Purchase Price = $500,000
HST Rate = 13% (0.13)
HST Amount = $500,000 × 0.13 = $65,000

In this example, the HST amount would be $65,000. This means you would pay an additional $65,000 in taxes on top of the $500,000 purchase price.

Always verify the current HST rate with the Ontario government or your real estate professional before making calculations.

FAQ

Is HST included in the purchase price of a new home in Ontario?

Yes, the HST is typically included in the total purchase price quoted by builders or real estate agents. However, it's important to understand how much of the total price is the actual home value versus the HST portion.

Can I buy a new home in Ontario without paying HST?

HST-free sales are less common in Ontario. Typically, all new residential properties are subject to the HST. However, some builders may offer special financing or payment plans that effectively reduce the upfront cost.

How does HST affect my mortgage payments?

The HST is added to the total purchase price of the home, which means it will increase the amount you need to finance through your mortgage. This will likely result in higher monthly mortgage payments.

Is the HST rate the same for all new homes in Ontario?

Yes, the HST rate is the same for all new residential properties in Ontario. The current rate is 13%.