The HST is coming into effect on July 1, 2010.
Essentially, the BC government is harmonizing its GST (5%) and PST (7%) to become the HST (12%).
PST will no longer exist.
How would this affect you when buying or selling real estate?
The HST will apply to “new” residential housing or substantially (90% or more) renovated homes. Resale (ie. “used”) homes are not subject to GST nor HST.
There’s a BC New Housing Rebate that would be available to help home buyers with some of the increase in tax. The rebate is 71.43% of the provincial portion of the HST, up to a maximum of $26,250.
According to the BC government: “purchasers of new homes up to $525,000 do not pay any additional tax due to harmonization.”
But based on my calculations, for a new construction of $525,000:
Before July 1, the purchaser will pay $26,250 in GST ($525,000 * 5% GST).
After July 1, the purchaser will pay $36,750 in HST after rebate.
$525,000 * 12% HST = $63, 000
A rebate of 71.43% of the provincial portion of the HST is $525,000 * 7% PST = $36,750 * 71.43% = $26,250
Total HST payable on the $525,000 new home is therefore $63, 000 HST – $26,250 Rebate = $36,750 which is $10,500 more than the GST.
To easily calculated how the new HST will affect your purchase price, please use the HST Calculator above.
In addition, if you are selling your home, the real estate commission will be applicable to the 12% HST instead of the original 5% GST. For any other services that already charge both GST and PST (7%) , there will be no increase.
The property transfer tax remained the same at 1% on the first $200,000 and 2% on the balance of the purchase price.
Here’s a summary of the benchmark price of homes in Greater Vancouver in May 2010:
IMPORTANT: Always contact your tax lawyer or accountant concerning any and all tax implications resulting from the purchase and sale of real properties, including GST and HST liabilities, exemptions, transitional provisions and rebates.