Is HST charged on real estate commissions in Ontario?
Yes. In Ontario, real estate commissions are a taxable supply for HST purposes. When a brokerage charges you a commission on the sale of your home, HST at the combined federal-provincial rate (currently thirteen percent) is added on top of the agreed commission amount.
As a seller, you will see the commission plus HST on your statement of adjustments. If the agreed commission is, for example, five percent of the sale price, you pay five percent commission plus HST on that amount. There is no HST exemption for commissions on residential real estate sales.
HST on commissions is separate from HST on the sale of the property itself. The resale of a used residential home is generally exempt from HST; it is the service fee for the agent's services that is taxable. If you are a GST/HST registrant (for example, if you run a business from the property), the tax treatment can be more complex. Speak with an accountant if you have any questions about how HST applies to your specific situation.
Key takeaways
- Real estate commissions in Ontario attract HST at thirteen percent on top of the commission amount
- HST on commissions is visible on your statement of adjustments at closing
- The resale of a used residential home is generally HST-exempt; the commission service is not
- Get accounting advice if you are an HST registrant with business use of the property