The BC HST New Housing Rebate
On July 1, 2010, BC implemented a Harmonized Sales Tax (HST) in place of the GST/PST system. British Columbians weren’t too keen on the HST raising the cost of goods and services such as energy and the price of new homes – so they held a referendum last year and 55% of ballotters (875,000 people) voted in favour of abolishing the HST.
The GST/PST system will be re-introduced on April 1st, 2013.
The voices of those opposed to the HST had a notable presence on social media sites. The Facebook page, NO BC HST started by political columnist Bill Tieleman, was 125,000 strong before it was deleted. [1]
About the BC HST New Housing Rebate
Before the HST is abolished in April of 2013, the government has put new transitional rules in place to help home buyers and builders with HST tax relief.
Originally, the BC new housing rebate was eligible for new homes (or substantially renovated homes) up to the first $525,000 of value, for a maximum rebate of $26,250. During the transition back to GST/PST, the threshold for the rebate will be raised to $850,000, for a maximum rebate of $42,500.
Additionally, the rebate will now apply to secondary and recreational homes (outside metro Vancouver and metro Victoria). More than 90% of newly built homes in BC are below the new $850,000 threshold, so many home owners will be eligible for the rebate.
The changes to the BC HST new housing rebate will be effective April 1st, 2012.
The HST New Housing Transition tax
While the government works to bring PST back, an action plan has been established to ensure an orderly transition. Finance Minister, Kevin Falcon stated that the housing transition for buyers of newly constructed homes will help keep the payable tax amount consistent and equitable, whether they fall under the HST or PST rules. The temporary housing transition measures will be in place until March 31, 2015.
- The temporary housing transition tax and its rebate will be administered by the Canada Revenue Agency on behalf of the province of BC
- The tax only applies to new or renovated homes where construction begins before the transition date and ownership occurs after
- For newly built homes where construction begins on or after April 1, 2013 – BC’s portion of HST will no longer apply. Builders will only have to pay 7% PST on building materials. Approximately 2% of the home’s final price will be embedded PST
The chart below shows the tax system and how much British Columbians can expect to pay regardless of when the new home construction starts and when ownership actually takes place. As you can see, the government has put in place measures to ensure a consistent tax amount is always charged.
*original chart taken from www.hstinbc.ca
This new move by the BC government to increase the amount of HST tax relief will ease the financial burden of purchasing a new home in the province with the highest average home price ($527,219). As long as BC mortgage rates continue to remain low, home affordability is a step closer to reality for people in British Columbia. [2]
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[1] http://billtieleman.blogspot.com/2012/02/facebook-wipes-out-no-bc-hsts-125000.html [2] http://www2.news.gov.bc.ca/news_releases_2009-2013/2012FIN0006-000165.htm