When the BC government introduced the Harmonized Sales Tax way back on Canada Day 2010, everyone involved in the real estate business held their breath, wondering what the implications would be. New rules, new procedures, new rebates….new headaches!
And you’d think that 18 months later, everyone would be completely dialled as to what the HST implications are in the world of real estate are. Not so. One of our realtors recently commented on how many of her clients are still under the impression that HST applies to ALL real estate transactions. This is not so. Generally speaking, HST is only payable on new properties and those owned by corporations in BC. (But please note that HST is payable on services involved in real estate though, such as lawyer fees, real estate commissions, house inspections, etc.)
And now that the HST is scheduled to be eliminated as of April Fools Day 2013, the government has announced new transition rules, designed to “ease the HST burden”on new homebuyers.
Yay- new rules, new procedures, new rebates….new headaches!
Under the new procedures…
- The New Housing Rebate threshold increases from $525,000 to $850,000, so that more than 90% of newly built homes will now be eligible for a provincial HST rebate. The maximum rebate has increased to $42,500 from $26,250.
- Buyers of new vacation homes outside the Greater Vancouver and Capital Regional Districts priced up to $850,000 are now be eligible to claim a provincial grant of up to $42,500 effective April 1, 2012.
- For newly built homes where construction begins before April 1, 2013, but ownership and possession occur after, purchasers will not pay the 7% provincial portion of the HST. Instead, purchasers will pay a temporary, transitional provincial tax of 2% on the full house price.These transition rules hope to ensure that whenever purchasers buy a brand new home they will all pay a consistent and equitable amount of tax, regardless of whether the home is built under the HST, PST or a mix of the two.
These measures will be in place until March 31, 2015 and only applies to homes where construction begins before the transition date and ownership and possession occur after.
For more detailed and technical information, please go to: http://www.newsroom.gov.bc.ca/2012/02/transition-measures-support-new-home-buyers-builders.html