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Anna Tarantino
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Just as Windsor's real estate market begins to recover, realtors and home builders are worried Ontario's new harmonized sales tax
could send sales plummeting again.

The number of home sales in the GTA in the first half of December was up 8-10% over the same period last year. The average price was aprox. $161,000, about the same as last December.

"We're out of the trenches for sure," said Jason Mercer, senior manager of market analysis for the board.

But the harmonized sales tax looms on the housing horizon. The tax will come into effect in July, 2010, combing the 5% GST and 8% PST into one 13% tax. The HST will apply to new homes and to all home closing costs, creating thousands of dollars more in taxes.

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.

This would mean an additional $30,000 on a $500,000 home.

The HST will hit new home buyers in Toronto harder because real estate prices are higher here, Ontario Homebuilders Association president Frank Giannone said during a meeting with the National Post editorial board.

"A $500,000 new home in Toronto doesn't get you much," said Mr. Giannone, who is also president of the Fram Building Group. Come to Windsor and save on the price you would put oUt on the HST. You could also look for a luxury waterfront property for less then the  cost of what you sold in Toronto.

Mr. Giannone said the HST is a good idea, but current plans mean the entire purchase price is taxed once the $400,000 threshold is reached, and that could discourage middle-income earners from buying a new home.

"If you don't have your own place yet, or you have your own place and you're planning on moving up, you've hit a wall," Mr. Giannone said.

The HST may only apply to new homes, but closing costs on all homes will be hit with the 15% tax. This will add approximately $2,000 extra in taxes per sale for costs like home inspectors, lawyers and real estate commissions, said Toronto Real Estate Board chief government and media relations officer Von Palmer.

The additional $2,000 could hinder buyers who already struggle to save enough for a down payment, Mr. Palmer said, adding new taxes are not what the industry needs during a recession.

"There is never a good time for a new tax, but this is bad," Mr. Palmer said.

He suggested the closing costs be exempt from the HST, but the government isn't considering that option.

"We can't exempt everything, otherwise it wouldn't be a harmonized sales tax," Ms. Johnston said.

Not everyone in the Ontario housing business thinks the HST means gloom and doom for the housing industry in the GTA.

"The HST is one factor that will impact sales next year, but it is only one of many factors," said Ted Tsiakopoulos, regional economist for the Canadian Mortgage and Housing Corporation..

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