If so, pay attention to the new HST being implemented in the Summer of 2010. This new tax has the potential to dramatically increase your overall purchase price.
I’ve got detailed information available, which I’d be happy to send to you upon request; however for the purposes of this blog, I am just going to touch on the highlights.
HST will be a 12 % Tax on the purchase of most goods and services in BC. This will be applicable to NEW Real Estate, not resale.
While this tax is a substantial increase from the current 5% GST that is applicable to new home construction, the government has recently announced rebates aimed at home buyers.
The following is an excerpt from a government news release:
“Enhanced New Housing Rebate
The new housing rebate would be enhanced so that new homes purchased as a primary residence would receive a rebate of 71.43 per cent of the provincial component of the HST, paid up to a maximum of $26,250.
As a result of the decision to enhance this proposed rebate, purchasers of homes priced up to $525,000 would pay no more tax, on average, than under the current PST. Homes above $525,000 would receive a flat rebate of $26,250. This enhanced rebate represents a 30 per cent increase in the threshold and maximum rebate available.”
The announcement was long, and complicated, but for most buyers, the bottom line is:
At a sale price of under $525 000, after all rebates you should be paying no more tax than you would presently under the GST/PST System.
Over $525 000, you will be paying significantly more for your new home. For a $1M purchase, the additional tax will add about $33 250 to the cost of your new home. Even after some savings on construction that may be passed along from developers as a result of HST, you will still be paying significantly more for your new home.
Buyers of resale homes should not be significantly impacted by HST, other than additional tax on closing services such as lawyer fees and home inspections.