(Source: Globe and Mail)

Ontario residents buying a new home for more than $400,000 next year would experience a little less sticker shock under revisions the McGuinty government is making to its proposed harmonized sales tax system.

The government unveiled an enhanced rebate Friday that would see the harmonized tax charged only on the amount of the purchase price over $400,000 instead of on the entire price.

The tax savings would be substantial. For example, on a new home that costs $500,000, the tax would be $6,000 – well below the $30,000 it would have been under measures contained in the provincial budget in March.

Initially, the full rebate was to be available only on new homes costing less than $400,000 and gradually phased out for homes up to $500,000. The rebate would also now be available for new rental housing.

The changes follow intensive lobbying by the home builders industry, which argued that the threshold was too low for the Greater Toronto Area, where nearly half of all new homes and condos cost more than $400,000.

Read Karen Howlett’s full article “McGuinty softens tax on new homes” in the Globe and Mail (June 20, 2009).

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