On November 2, 2009 the Law Times newspaper published an article on the likely effects of the new combined Provincial and Federal sales taxes (PST and GST) which will create a 13% HST starting in July 2010. The following is an extract from the article:

“The practice of law at the consumer level is a highly competitive area,” says Murray Miskin of Miskin Professional Corp. in Whitby.

“Ultimately, the lawyers will probably end up making less money because for one thing, there will be fewer deals in the purchase and sale of homes, so they’ll be doing less volume of work. But also, they may have to make concessions to clients because of the competitive nature of fees.”

Miskin’s real estate practice includes residential home sales throughout the GTA and into cottage country via his firm’s office in Peterborough.

He worries not only that the HST will stymie any possible resurgence of home sales but also that the construction industry could suffer due to the higher tax rate on new home purchases.

From his vantage point in Whitby, he was front and centre during the uncertainties swirling around the Oshawa General Motors plant.
Without any confidence in jobs and the economy, people stopped buying property.

“Last winter was bleak for the real estate market. Real estate agents weren’t making any money. Real estate lawyers weren’t making any money,” he says.

“A lot of lawyers had to lay off their real estate staff and they’re just starting to come back again. So this past year has been very difficult for real estate practitioners until the market started heating up again.”

He suggests that if the economy continues its recovery, the Bank of Canada will have no choice but to raise rates by next summer, which would coincide with the new tax.

While he acknowledges “the real estate market is a very volatile market,” he says lawyers might need to become creative and offer clients deals or discounts to get them in the door.
That’s exactly what his firm is doing.

“What we’re saying to our clients is if they come to us with a deal that closes after the HST is in effect, we will adjust our fee so they don’t have to pay extra,” says Miskin.

“With new homes, there’s often a delay in closing, so we’re trying to give the client some stability where even if there is a delay, they won’t have to pay us more. We want to get the deals in and offer some help to the clients who are hurting also.”

But within the city of Toronto, Miskin isn’t optimistic that the market will easily absorb the tax.
“It may put a permanent damper on the market just like the Toronto land transfer tax has put a permanent damper on the Toronto market,” he says.

“The Toronto land transfer tax has been good for the GTA, anywhere outside of Toronto where it’s less expensive to purchase because of the land transfer tax, and I think people will factor all of these taxes into their decision-making process.”

The Miskin Law firm discounted the extra cost in legal fees from HST on real estate  transactions brought to our office before April 1, 2010. Eligibility for this discount has expired.