The old adage remains true. The only constant in life is death and taxes. There are tax consequences for the buyer of the newly built home. This column will examine some of those taxes and the impact they can have on you.

has recently announced the reduction of the GST from 7% to 6%, you should know that the GST is still in play for your new home. With most builder agreements, the GST is usually included in the purchase price of the home. If it is not, beware! In cases where it is included, the builder will receive the GST rebate that you as the buyer would be entitled to. This is the normal situation where you or your immediate family intend to reside and then reside in the new home after closing. In order for this to work, you simply execute the appropriate paperwork prior to closing. Again, this is how it usually works. The GST will be included in the sale price of your home provided you or one of your relatives move into the home. If you are buying the house as an investment property with no intention to occupy it, you will have to pay the GST on the sale price of the home. However, you may be entitled to a GST rebate by completing and submitting the rebate application. This can be a tricky area so if you have any questions, you should consult with an experienced real estate lawyer.

The other tax that comes into play on your purchase is the Land Transfer Tax (LTT). The LTT applies when you purchase land in Ontario, both new and resale. The amount of the tax is based on the value of the property. The higher the value of the property, the higher the tax you will pay. You must pay the tax on closing as a government disbursement. For example, if you are buying a house worth $250,000, the LTT will be $2,225.00.

There is a Land Transfer Tax Rebate Program which is only available to first time homebuyers of newly constructed homes. In order to qualify, you must be over eighteen years old and have never owned property anywhere in the world. The maximum rebate is $2,000. Thus, if the new home you are buying is worth $227,500.00 you will not pay any Land Transfer Tax. However, if the new house exceeds that amount, there will be some tax owing. In order to take advantage of the rebate program, there is a form which your lawyer will have you sign to confirm that you qualify for the program.

Understanding the potential tax implications of your purchase is critical if you are going to avoid surprises. Working with an experienced real estate lawyer can help guide you through this maze.