(22.7% of new homes sales in Ontario were over $500,000 in 2008.)
Homes under $400,000 will not be subject to the tax.
We asked various lenders if they expect to allow borrowers to finance the new tax (as is the case with the GST now). Most expect it to be possible, but no one knew for sure.
If homebuyers do finance the tax, it will raise mortgage payments hundreds of dollars a month for buyers of new $1/2-million+ homes, costing several thousands in extra interest over a 5-year term.
The new tax will also increase the cost of Realtors' commissions, appraisal fees, home inspections, and legal fees by 8%.