Trade in old house on new, save any HST?

[zoro99]

Hi all,

I am wondering if there is any HST savings if one was to trade their existing old house + cash to a developer who is selling a new SFH. I know that when trading in a used car on a new car, you only pay tax on the cash you pay on top of the trade. Does the same thing apply in real estate? eg. New house costs $2M. We use the assessed value of my place of $800K to set the value of the trade, and I then ante up $1.2M additional cash. Do I pay HST on the $1.2M, or I still pay it on the $2M?

I'm not sure if there is any way tax advantages to trying to trade-in an old house on a new one? Just curious....

[BCAccountant]

Hi all,

I am wondering if there is any HST savings if one was to trade their existing old house + cash to a developer who is selling a new SFH. I know that when trading in a used car on a new car, you only pay tax on the cash you pay on top of the trade. Does the same thing apply in real estate? eg. New house costs $2M. We use the assessed value of my place of $800K to set the value of the trade, and I then ante up $1.2M additional cash. Do I pay HST on the $1.2M, or I still pay it on the $2M?

I'm not sure if there is any way tax advantages to trying to trade-in an old house on a new one? Just curious....

No, it doesn't work that way, you would pay HST on $2million and there are no tax advantages. The main difference is that vehicles (new or old) are a taxable supply with regards to HST/GST. Alternatively new and old residential housing are not both taxable supplies, new housing is taxable for HST purposes and used housing is tax exempt for HST purposes. So you would pay HST on the entire purchase price of the new residence and the consideration (house and/or money) would be deducted after the HST had been calculated.

[Arrow]

There will be a very small saving. The deal will be based on the "difference": that is the difference between the price of the SFH and your house. When the difference has been agreed, prices will be attached to each property. They will be at the lower end of the range for both, so you will pay less HST and PPT and the developer will pay less PPT. The deal has to pass the tax smell test so the room to manoeuvre is small ... your house has to sell for something close to the assessed value.
PM me if you have any other questions.

[MultipleOffer]

nope.