According to brokers, 46.7 per cent of comments from buyers and sellers indicate confusion about how the new HST affects home sales. And 57.1 per cent of realtors say they get \According to brokers, 46.7 per cent of comments from buyers and sellers indicate confusion about how the new HST affects home sales. And 57.1 per cent of realtors say they get "many" questions about how the tax works. (CBC)

Residents of Ontario and B.C. are unsure about how the harmonized sales tax (HST) affects real estate transactions, a new study finds, and the confusion is being blamed for a slide in home sales.

Home sales in Toronto fell 34 per cent in July, according to the Toronto Real Estate Board.

TREB reported that there were 6,564 sales last month, down from 9,967 in the same month in 2009. Home sales were at the lowest level since 2002.

"The level of July sales remained below the expected long-term trend. The market has become more balanced following record monthly sales through most of the winter and early spring," said board president Bill Johnston, in a release.

Vancouver too has seen a sharp decline in home sales. According to the Real Estate Board of Greater Vancouver, home sales dropped 45.2 per cent in July, with 2,255 homes sold in July 2010 versus 4,114 homes sold in July 2009.

Confusion around how HST applies to homes sales could be to blame. A new survey of realtors released Thursday by Royal LePage finds that 43.9 per cent feel the tax is playing a part in cooling the housing market.

"According to our realtors who work in B.C. and Ontario communities every day, misconceptions about the HST are having an effect on the market in both provinces," said Phil Soper, president and chief executive of Royal LePage Real Estate Services, in Toronto.

According to the brokers, 46.7 per cent of comments from buyers and sellers indicate confusion about how the new tax affects home sales. And 57.1 per cent of realtors say they get "many" questions about how the tax works.

The study was conducted via email at the end of July with Royal LePage's 765 realtors in Ontario and B.C.

The harmonized sales tax took effect on July 1 in Ontario and B.C. It applies to the sale price of a newly built home — not a resale home — and fees for services and commissions incurred during the real estate transaction.