Proposed new HST Transition Rules should boost new Okanagan home sales!

The BC Government has announced new Transition Rules for HST applicable to new home purchases in BC.  As they apply to the Okanagan, the two most important considerations are as follows:

BCT HST credit on new homes of 5% previously applied only to homes priced up to $525,000.  It will now apply to all new homes priced up to $850,000, at which point the credit will cap at $42,500 and apply to homes above that price threshold.

MORE IMPORTANTLY: Previously the HST tax credit only applied to homes purchased as a primary residence.  The new rules will apply to secondary home purchases as well.  This will effectively reduce the price of a $850,000 home by $42,500 for purchasers buying a second home in the Okanagan.

There are additionsl rules for homes started before April 1, 2013, but completed after that date.  A summary fo the proposed changes is below.  The information below has not yet become law so there may be some changes.

HST Transition Rules for Housing

The Province announced the HST Transition rules on February 17, 2012 as the Province transitions back to the PST/ GST system on April 1, 2013.

Used Residential Homes (most resales) are, and remain, exempt from HST.

1. Under the current system, there is no additional rebate for new homes greater than $525,000 – Effective April 1, 2012, for homes completing prior to April 1, 2013, this rebate threshold has been increased to $850,000, meaning that the maximum rebate available (for homes worth 850k) is $42,500. This provincial portion HST rebate will also be available to secondary or vacation residences located outside the lower mainland.

Effective HST on Homes (Primary Residence) - April 1 2012 to April 1 2013

Purchase Price Gross HST (12%) Rebate Available NET Purchase Price
$100,000.00 $12,000.00 $6,800.00 $105,200.00
$150,000.00 $18,000.00 $10,200.00 $157,800.00
$200,000.00 $24,000.00 $13,600.00 $210,400.00
$250,000.00 $30,000.00 $17,000.00 $263,000.00
$300,000.00 $36,000.00 $20,400.00 $315,600.00
$350,000.00 $42,000.00 $23,800.00 $368,200.00
$400,000.00 $48,000.00 $23,150.00 $424,850.00
$450,000.00 $54,000.00 $22,500.00 $481,500.00
$500,000.00 $60,000.00 $25,000.00 $535,000.00
$550,000.00 $66,000.00 $27,500.00 $588,500.00
$600,000.00 $72,000.00 $30,000.00 $642,000.00
$650,000.00 $78,000.00 $32,500.00 $695,500.00
$700,000.00 $84,000.00 $35,000.00 $749,000.00
$750,000.00 $90,000.00 $37,500.00 $802,500.00
$800,000.00 $96,000.00 $40,000.00 $856,000.00
$850,000.00 $102,000.00 $42,500.00 $909,500.00
$900,000.00 $108,000.00 $42,500.00 $965,500.00
$950,000.00 $114,000.00 $42,500.00 $1,021,500.00
$1,000,000.00 $120,000.00 $42,500.00 $1,077,500.00

2. For new homes where construction begins before April 1, 2013, BUT where possession transfers after April 1, 2013, neither HST nor PST will be payable, but rather purchasers will pay a temporary, transitional provincial tax of 2% per cent on the full house price in addition to the GST payable.

3. Special Transition Tax Rebates will be available to real estate developers and home builders who commence a home prior to April 1, 2013 but where it is sold after April 1, 2013 to prevent double taxation based on the extent of completion on April 1, 2013.

% complete April 1, 2013 Transition Tax Rebate to Builder Rebate (Ex: 500k Home) TTax Paid by Home Buyer (500k home)
N/A$010000
10-25% 1.50% 7500 10000
25%-50% 1.00% 5000 10000
50%-75% 0.50% 2500 10000
75%-90% 0.20% 1000 10000
>90% 0.00% 0 10000

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