KPMG report on HST's impact to Real Estate

For more information on HST's impact on real estate...check out KPMG's report here

Proponents argue that HST is going to beneficial for Ontario as a large portion of our economy is based on construction and manufacturing (industries that require a lot of start up capital rather than labour capital).

Some benefits include:

• More construction jobs. A recent C.D. Howe Institute report estimates there was an increase in construction machinery and equipment investment by 12.1 per cent in the Atlantic Provinces after a HST was implemented there. As the purchasing power of a business increased, thanks to the benefits of input tax credits, so did the investment.

• Infrastructure construction stimulus. The Ontario Road Builders’ Association (ORBA) have been longtime advocates for sales tax harmonization and say the new HST will help with competitiveness and clarity. With a simpler tax system it will eliminate a lot of bureaucracy and paperwork. Construction is a paper-heavy industry, but having a streamlined tax system will alleviate a lot of that burden.”

For finance, insurance and real estate (FIRE), which are huge component of the Toronto economy, this is not so much of a good thing, especially for real estate investors like us (will it drive jobs away from Toronto?). It will be inflationary and add significant costs to our business. Services such as home staging, legal fees, accounting, maintenance, real estate commissions, new home prices will all go up with no benefit to the parties involved.