A builder sells a newly built condominium unit in Ontario to a buyer for $500,000 before any tax. Which taxes apply to the purchase?
Correct Answer
D) 13% HST on the full $500,000 plus land transfer tax
A builder's sale of a new residential condominium unit is a taxable supply, so HST applies at 13% (5% federal plus the 8% Ontario component) on the full $500,000, or $65,000 before any new housing rebates. The buyer also pays Ontario land transfer tax when the transfer is registered: $6,475 on $500,000 under the Land Transfer Tax Act, s. 2(1).
Why This Is the Correct Answer
HST at 13% on the full $500,000 plus land transfer tax is correct. The builder's sale is a taxable supply, so HST of $65,000 applies before any rebate, and the buyer pays land transfer tax of $6,475 when the transfer is registered: 0.5% of the first $55,000, 1% to $250,000, 1.5% to $400,000 and 2% on the remaining $100,000.
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