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Jul
11
GST cuts spell good news for homebuyers and sellers
Written by radu
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When the 2006 Federal Budget was unveiled by the Conservatives, it turned out to be a ‘good news’ budget for most Canadians — and home buyers and sellers were certainly no exception. A reduction in the GST from the present 7% down to 6% will kick in on Canada Day – July 1st – offering an immediate cost benefit to anyone buying or selling a home as of that date. Note that the cost reduction applies when the transaction actually closes, so even contracts signed before that day could potentially benefit from the tax cut, depending on their closing.
The tax cut will benefit homebuyers and sellers with savings on all professional services associated with a real estate transaction, where the GST would typically be charged. This includes fees paid to lawyers, appraisers and home inspectors as well as the real estate commission paid to your sales professional. Other relocation costs including movers, packing materials, storage or vehicle rentals will also be reduced thanks to the lower GST charge as of July 1, 2006.
The cost of home ownership and home improvements will also benefit from the reduction in GST. Major expenditures for renovations and the purchase of furniture and major appliances will suddenly become just a little bit more affordable. And those homeownership savings will continue long after the real estate transaction is completed.
Saving one percent on virtually every taxable expenditure will serve to increase the disposable incomes of both homeowners and prospective purchasers alike. And with a little more cash in hand, you can expect an increase in consumer confidence to follow. Those are both good indicators of a healthy real estate market. Even though rising home prices and interest rates are expected to cool the resale housing market in the future, recent predictions by the Canadian Real Estate Association (CREA) have been revised upwards to forecast another record-breaking real estate year in 2006. Housing demand is expected to remain very strong and will support further price increases in major markets across the country this year.
For more information on how these new tax reductions can impact your transaction and for insights on the continuing strength of the real estate market, contact Radu and get his expert advice.
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July 11th, 2006
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