Buying a Pre-Construction Condo in Downtown Toronto: Do You Have to Pay HST?
Buying a brand new pre-construction condo in downtown Toronto is exciting, but it may also bring up many questions and uncertainties. It can be confusing trying to understand how HST works, for example, and who pays for it. So, let’s break down HST when purchasing a pre-construction condo in Toronto and take a closer look at the HST Rebate.
In 2010, Ontario implemented Harmonized Sales Tax (HST), which raised the tax on new homes to 13% (HST) – a total of 5% GST (federal taxes) and 8% PST (provincial taxes). To help new homeowners cover the growing costs of owning a new home, the government created the HST Rebate Program. This program works in two ways – depending on what kind of buyer you are – to reimburse buyers for a portion of the tax.
The two ways that buyers can qualify for the HST Rebate in Ontario are:
- HST New Home Rebate (NHR): When you buy a pre-construction condo that you plan to live in (end user)
- New Residential Rental Property Rebate (NRRPR): When you buy a pre-construction condo as an investor with the intent of renting it out after closing (investor)
End Users
When you buy a pre-construction condo in Downtown Toronto, you’re assigning the right to the HST rebate to the builder. The builder then uses the rebate to reduce the purchase cost of the property. This portion of the HST is not added to your property’s purchase price, and the builder will apply for the HST rebate for the property, thus reducing the amount due at closing by the amount of the rebate.
In short: you don’t have to pay for HST on your new condo, as it’s already built into the final purchase price of the home, including the cost of the HST NHR. This is provided you’re a Canadian resident and provided that you, or an immediate family member such as a parent or sibling, plan on being the principal resident of the condo.
One thing to keep in mind is that if you sell or lease the property before the one-year mark, the Canada Revenue Agency (CRA) will require you to pay back the HST Rebate in full.
Investors
If you plan on purchasing a pre-construction condo for sale in Downtown Toronto with the intent of renting it out after closing, you need to apply for the New Residential Rental Property Rebate (NRRPR) rather than the NHR.
To receive the HST Rebate, you need to submit a one-year lease agreement and prove that the property will be rented out for one year after closing. Additionally, you must pay the full HST amount upfront and you will receive the rebate a couple of months after sending in the proof of the lease agreement. Similarly to the NHR, if you end up selling or flipping the property before the one-year mark, the CRA will require that you pay back the HST Rebate in full.
How Much Is the HST Rebate?
The amount of the HST Rebate varies depending on the price of the new condo. If the pre-construction condo is priced under $350,000, then you’re eligible to receive a maximum of $30,000 back (36% rebate on the GST portion, and 75% on PST). Between $350,000 and $450,000, there is a sliding scale, and for properties costing more than $450,000, a maximum rebate of $24,000 can be received.
There are many HST Rebate calculators on the internet that you can consult to calculate the exact amount, but keep in mind that if you’re purchasing a pre-construction condo and plan to live in it, the HST in the majority of cases will already be factored into the purchase price, and you don’t need to worry about it.
Do you have any questions about HST when buying a pre-construction condo in Toronto? Connect with BAZIS on social media (Facebook, Twitter or Instagram) and let us know!
BAZIS is a real estate development company specializing in developing communities and pre construction condos in Toronto area. We’re committed to excellence in every facet of the commercial and residential real estate development process. Combining visionary architecture, design, marketing and construction with the epitome of corporate integrity and environmental responsibility, BAZIS has become a major force in articulating Toronto’s ever-evolving skyline.
How Do Assignments Work When Purchasing a Pre-Construction Condo in Toronto?
If you’ve purchased a new condo or are in the market to do so, you may have heard the term “assignment sale” and wondered what assignment sales are and how they work. Today, we’re breaking down everything you need to know about assignment sales.
What are assignment sales?
Assignment sales are a type of sale in which a buyer (assignor) sells their condo contract to a buyer (assignee) before the closing (move-in) date. Assignment sales occur for both homes and condos, however are most prevalent in pre-construction condos.
Why do people sell before their closing date?
When purchasing a pre-construction condo in Toronto, there can be a long wait time between the point of purchasing and the actual move-in date. It can sometimes take years before a condo is built and a buyer can move in. During that time, circumstances may change for the buyer. For example, the buyer may have accepted a job offer in another city, they may have gotten married and had kids and need a bigger space, or they may not be able to afford closing anymore. Another reason could be that the buyer bought the condo in an up-and-coming area and is now looking to make a profit on the sale. There are many reasons why a person may want to sell their pre-construction condo to another interested buyer.
How do assignment sales work?
Assignment sales can work in different ways depending on the builder. Some builders don’t permit assignments or allow them only if they are paid an assignment fee. So having the builder’s approval is the first essential step to proceeding with an assignment.
When a buyer makes an assignment sale, what they’re actually selling is the condo contract – not the condo itself, since they don’t actually own it yet (since it hasn’t been closed). They are passing along their contractual agreement with the builder to purchase the home – their right and their obligation.
The buyer purchases this right and obligation, and must abide by all the terms within the original contract with the builder, who is the original seller. The original buyer must sign an Agreement of Purchase and Sale, including an Assignment Agreement Clause.
The pros and cons of assignment sales
To break it down quickly, here are some of the main pros and cons of assignments.
Pros:
- Buyers (assignees) can purchase a brand new condo at a lower price
- The condo’s price/value will likely continue to rise as it’s being constructed
- Buyers can get into an amazing building that sold out
- Buyers benefit from all the perks of the original agreement, such as having their new condo be covered by the Tarion warranty program, which offers years of warranty against errors and defects with the condo unit, as well as provides warranties for newly-installed appliances; the original agreement may also include upgrades, credits, and capped developing charges from the builder
Cons:
- The builder must approve the transaction before it can go ahead
- There’s less ability to negotiate the price of the home, or the terms and conditions of the agreement, since buyers are inheriting the original purchaser’s contract
- Buyers (assignees) will be responsible for closing costs, which can sometimes include the education and development levies, Tarion legal fees, and HST on appliances
- Buyers will also be responsible for paying land transfer tax, municipal levies, legal fees and more
Are you considering investing in a pre-construction condo, and have you considered assignment sales? Connect with BAZIS on social media (Facebook, Twitter or Instagram) and let us know!
Townhomes vs. Condos: Do You Know the Differences?
When buying a new home in Toronto or any other urban area, many of the options on the market are either townhomes or condos. These two types of housing often elicit many questions from potential homeowners and bring up many points of confusion, especially when it comes to homeownership and shared/communal spaces. This blog post will break down the differences between townhomes and condos and will help you determine which one is best for you and your family.
First things first. Most people understand that townhomes (or townhouses) are individual houses that are built side by side, with one or two walls of each home being shared with the home next to it, whereas condos are a type of home that are often an apartment within a larger complex or building (although they can take other forms, including townhomes!).
Here are some important differences between these two types of home:
Ownership
With a condo, you own the interior of the residence (your unit) only. Exterior parts of the residence, such as the building itself and the outdoor grounds, as well as communal areas such as gyms, party rooms, and rooftop BBQ areas, are owned by the condo association. Condo associations represent the condo owners and their interests. They’re run and funded by the condo residents and also have boards of directors. The role of the boards is to organize regular meetings, establish and maintain budgets, and enforce rules and regulations relating to the condo. If you’re a condo owner, you, therefore, are a joint owner of the communal and common areas. This means you will have to pay a monthly fee.
New townhomes in Toronto can be either freehold or condominium. If they’re freehold (like our upcoming Bartley Towns community of new luxurious townhomes at Eglinton and the DVP), that means that you fully own the house and also the land on which it is built, as well as any yard or deck surrounding it (similarly to how homeowners of detached homes own their homes and yards outright). Freehold townhomes do not have any monthly maintenance fees.
Condominium townhomes, by contrast, do not include land ownership. Similar to the condo apartments discussed above, residents only own the interior of their home, and the land on which the home is built – as well as the common areas surrounding it, if applicable – are jointly owned amongst all owners. This ownership is again managed through a condo association and involves a monthly fee.
Legal Statutes
Condos are governed by legal statutes, whereas townhomes are not. This means that condo owners have less autonomy since they’re subject to the bylaws outlined by the condo corporation. Residents may not be able to make changes to their homes and may face restrictions regarding the type of exterior decorations they’re allowed to put up, whether or not pets are allowed, rules regarding common areas’ use and open hours, garbage and recycling rules, and also whether or not they’re allowed to rent out their home.
By contrast, owners of freehold townhomes are entirely free to do whatever they like with their homes.
Privacy
Condo owners generally experience a lower level of privacy, especially condo apartments, since they live in close quarters with many other residents and share communal entrances and exits. Owners of new townhomes in Toronto, especially freehold townhomes, are more likely to have a greater sense of autonomy, privacy, and independence.
A Summary of the Main Differences
To recap: condo owners only own the inside of their homes, and they’re joint owners of the building’s exterior and communal areas. Townhome owners may have the same situation if the townhome is a condo. For freehold townhomes, however, residents fully own their house and also the land it’s built on and the surrounding yard or deck. Freehold townhomes do not have maintenance fees, while condos do. Condos are governed by legal statutes, whereas townhomes aren’t. This means that owners of freehold townhomes have more autonomy. Lastly, people who live in freehold townhomes generally experience a greater degree of privacy and independence.
Questions? Get in touch by sending us a direct message on social media (Facebook, Twitter, or Instagram) or contact us at 905-532-0435. And make sure to register for our upcoming Bartley Towns community if you’ve decided that townhome living is right for you!
Top Toronto Townhome Upgrades to Maximize Future Resale Value
Torontonians love their new homes. In a 2018 Globe and Mail Report, there will be well over 100,000 new pre-construction townhomes, Toronto between 2010 and 2020. With all the new houses built in the GTA, it’s easy to see new trends as they emerge, and new home buyers demand them.
It’s important to consider not only the upgrades that have *sizzle* but also the practical upgrades that are costly to do later, as well. These are things such as upgrades to ceiling heights, electrical, and insulation. Continue reading
Your Questions Answered – How Do I Buy a New Preconstruction Condo in Toronto?
Buying a new preconstruction condominium is an exciting adventure. The downtown Toronto lifestyle is hard to beat. You have the ultimate freedom. Just lock the door and leave. The city awaits!
When thinking of buying a new preconstruction condo, learn the steps to buying a new preconstruction condominium or townhome in Toronto. Living in a home purchased directly from the builder means that you get to be the first one to live in your home and you get to choose exactly how you want it to look! Continue reading
Design and Decor Inspiration for New Townhomes in Toronto
One of the biggest benefits of buying new is being able to make it exactly how you want it. Bartley Towns new Toronto townhomes offer just that. The ability to customize their Bartley townhomes is a huge benefit for busy Toronto families.
The process of selecting your own finishes is a pleasure to dream about. Start by choosing your favourite looks in magazines and keeping an eye on interiors that reflect your personal style. It can be as much fun to choose your home’s finishes, as it is to put together your fall wardrobe! Continue reading
Fall 2018 Design Trends
The year of the wheel turns again, and we find ourselves slipping back into fall. As we look forward to big cozy sweaters, pumpkin spice lattes and crisp fall days, we can also begin to turn our attention inwards, to the home.
We’ve curated a few interior design trends here for you. While navy and gold still dominate dramatic colour schemes, this year, it’s mixed with pastels. We’re also seeing unique ways to mix natural and high-gloss luxury materials. Continue reading
Sweet Design Trends for Condo Owners
The rules of interior design tend to change, although they change more slowly, evolving over time. Thank goodness, because staying on trend is hard to do! Your condo should be a reflection of your own personal style, so here we present some of 2018’s ‘sweetest’ interior design trends. Continue reading
Inspiring Design for New Condos from the Interior Design Show
Toronto’s Interior Design Show shapes the industry for the upcoming year, showcasing the latest trends in design and decor, and attracting interior design professionals from all over North America.
This year, we noted some emerging trends to inspire you with your own home or condo. Continue reading