Do real estate agents in Ontario charge HST on their commissions?

Yes. Real estate commissions in Ontario are taxable supplies. A registered real estate agent or brokerage charges 13% HST on the commission for services rendered in connection with the sale or purchase of property. For a typical residential sale with a 5% commission, a $750,000 home attracts a $37,500 commission, and HST on that commission is $4,875.

For sellers of residential property, the HST on commission is simply a transaction cost — there is generally no ability to recover it because the sale of used residential property is an exempt supply and the seller is not registered for HST.

For sellers of commercial property or new residential developments (who are registered businesses), the HST paid on commission may be claimable as an ITC, reducing the net cost. Similarly, if a business buys commercial real estate and pays HST on the agent's commission, that HST is likely an ITC.

Agents must be registered for HST once their commissions exceed $30,000. In practice, most agents register quickly in their careers because commissions on even a few transactions easily exceed the threshold.