How to Calculate Hst on New Homes in Ontario

When purchasing a new home in Ontario, understanding how Harmonized Sales Tax (HST) is calculated is essential for budgeting and financial planning. This guide explains the HST calculation process, provides a step-by-step calculation method, and includes an interactive calculator to simplify the process.

What is HST in Ontario?

Harmonized Sales Tax (HST) is a single sales tax that combines the provincial sales tax and the federal Goods and Services Tax (GST) into one rate. In Ontario, the current HST rate is 13%. This means that when you purchase a new home, the total price includes the base price plus 13% HST.

The introduction of HST in Ontario was part of the federal-provincial agreement to simplify the sales tax system. Before HST, Ontario had a provincial sales tax rate of 8%, and the federal GST rate was 7%, making the total sales tax rate 15%. With HST, the combined rate became 13%.

Note: The HST rate may change over time. Always verify the current rate before making calculations.

How is HST calculated on new homes?

Calculating HST on a new home is straightforward. The formula is:

HST Amount = Home Price × HST Rate

Total Price = Home Price + HST Amount

Where:

Home Price - The base price of the home before taxes
HST Rate - The current HST rate in Ontario (13% as of 2023)

The HST amount is calculated by multiplying the home price by the HST rate. The total price is then the sum of the home price and the HST amount.

Step-by-step calculation guide

Determine the base price of the home you are purchasing.
Identify the current HST rate in Ontario (13% as of 2023).
Multiply the home price by the HST rate to calculate the HST amount.
Add the HST amount to the home price to get the total price.

Using the calculator on the right side of this page, you can quickly and accurately calculate the HST on a new home in Ontario.

Example calculation

Let's say you are purchasing a new home in Ontario with a base price of $500,000.

Home Price = $500,000
HST Rate = 13% (or 0.13)
HST Amount = $500,000 × 0.13 = $65,000
Total Price = $500,000 + $65,000 = $565,000

In this example, the HST amount is $65,000, and the total price including HST is $565,000.

Common mistakes to avoid

When calculating HST on new homes, it's easy to make a few common mistakes:

Using the wrong HST rate: Always use the current HST rate for Ontario, which is 13%. Using an outdated rate can lead to incorrect calculations.
Including other taxes: HST is the only sales tax applicable to new homes in Ontario. Do not include property transfer taxes or other fees in the HST calculation.
Rounding errors: Be careful when rounding numbers, especially when dealing with large home prices. Small rounding errors can add up.

Frequently Asked Questions

What is the current HST rate in Ontario?

The current HST rate in Ontario is 13%. This rate combines the provincial sales tax and the federal GST.

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

Yes, the HST is typically included in the listed price of a new home in Ontario. However, it's always a good idea to verify the exact breakdown with your real estate agent or the builder.

Are there any exemptions or reductions for HST on new homes?

As of 2023, there are no specific exemptions or reductions for HST on new homes in Ontario. The standard 13% rate applies to all new home purchases.

How does HST affect the mortgage payment on a new home?

The HST amount is added to the total price of the home, which affects the mortgage amount and the overall cost of the home. This can impact your monthly mortgage payments and the total interest paid over the life of the mortgage.

Can I negotiate the HST amount when purchasing a new home?

No, the HST amount is a fixed percentage of the home price and cannot be negotiated. It is a mandatory tax that must be paid when purchasing a new home in Ontario.