Government announces new HST/PST housing transitional rules
The government today announced the HST/PST transitional rules on new homes.
As the province transitions back to the PST, which will replace the HST effective April 1, 2013, measures to ease the HST burden on new home buyers include:
- The BC New Housing Rebate threshold will increase to $850,000 from $525,000, so that more than 90% of newly built homes will now be eligible for a provincial HST rebate effective April 1, 2012.
- The maximum rebate will increase to $42,500 from $26,250 effective April 1, 2012.
- Buyers of new secondary vacation or recreational homes outside the Greater Vancouver and Capital Regional Districts priced up to $850,000 will 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.
HST/PST transition rules will help ensure that whenever purchasers buy a new home they will all pay a consistent and equitable amount of tax, whether the home is built:
- entirely under the HST;
- entirely under the PST; or
- partly under HST and partly under the PST.
The temporary housing transition measures will be in place until March 31, 2015. The tax only applies to homes where construction begins before the transition date and ownership and possession occur after.
HST and how it applies to Real Estate:
On July 1, 2010, the provincial and federal governments will combine the 7% provincial sales tax (PST) and the 5% federal Goods and Services Tax (GST) into a 12% Harmonized Sales Tax (HST). Here is updated information, verified by Canada Revenue Agency as of May 21, 2010. This information is in response to questions and comments from members. We greatly appreciate your input. As a rule of thumb, the GST rules that now apply to residential property will also apply under the HST.
How does it apply to Real Estate Commissions:
Commissions will be subject to HST in the same manner as they currently attract GST. Commercial vendors will be able to claim input tax credits on HST paid to agents, while individuals selling personal use property will not.
How does HST apply to Non-Residential Real Estate:
As a rule of thumb, the 12% HST will apply to non-residential sales and leases in the same way the 5% GST now applies. This includes exemptions and input tax credits for GST/HST registrants including tenants and purchasers.