Do you know how recent changes to the Harmonized Sales Tax (HST) Transitional Rules affect you as a prospective new home buyer?
On February 17, 2012 the provincial government announced significant changes to the Harmonized Sales Tax (HST) Transitional Rules as BC gets ready to switch back to Provincial Sales Tax (PST) on April 1, 2013.
These new rules are intended to relieve some of the tax pressure on new home buyers and encourage new home purchases in the next year. The major changes include four areas:
1. BC New Housing Rebate
The maximum rebate threshold for new BC homes for sale has increased up to $850,000 from $525,000. This creates a maximum potential rebate of $42,500 compared to $26,250 under previous rules. Now, over 90% of new homes in BC are covered by this rebate.
(Effective April 1, 2012)
2. Secondary BC Vacation Homes
Buyers looking to purchase secondary vacation or recreational homes outside Metro Vancouver are also eligible for a maximum rebate threshold of $850,000.
(Effective April 1, 2012)
3. New BC Home Builds
On new building projects where construction begins before April 1, 2013 but ownership occurs after purchasers will only pay a transitional 2% on the full house price rather than the 7% provincial portion of HST. This new ruling will ensure all new home builds pay the same amount of tax regardless of which tax law(s) it is built under.
(Effective on written purchase agreements signed on or after February 21, 2012)
4. Temporary First-Time New Home Buyers’ Bonus
This temporary bonus is only available until March 31, 2013 (prior to reverting back to PST) and is in the form of a personal income tax credit for first time home buyers, up to 5% of the new home purchase price. For first time buyers, purchasing a new house, condo or townhouse in BC is even more affordable.
(Effective immediately)
How do you feel about these new transitional HST guidelines for BC Real Estate?
If you are a prospective home buyer wondering what these tax implications mean to you I would love to speak with you. Please leave a comment below or call me at 778-316-4290.
