The consumer in BC is confused about how the BC HST affects them, especially when it comes to housing. The reality is - generally there is little or no effect on the net price the cunsumer pays, compared to the previous GST rules, except on more expensive new homes. A few quick guidelines are as follow:
1: If you are buying a resale home, there generally is No HST to pay, unless the GST or HST was never paid when the home was originally purchased, either because the Seller is osmeone who was able to obtain an Input Tax Credit due to their corporate status or they were renting the property out as a nightly rental, where GST/HST was being collected on the rent. This normally only applies to resort properties.
2: If you are buying a new home, there is very little effect of HST on the purchase price, up to $525,000, as long as you are using the property as a primary residence. Up to $525,000 a 5% rebate applies to the provincial portion of the HST (7%) and any rebates on properties priced below $450,000 on the federal portion of HST still apply. The thinking, byt the provincial government is that the builders will receive an Input Tax Credit on the Provincial portion of the HST they pay for their materials and supplies, which will amount to around 2% of the cost of building the home. In a competitive market the saving will be expected to be passed on to the consumer, resutling in no additional cost to the Buyer for any home, condo, or townhouse priced under $525,000. The rebate on HST is capped at $26,250 (5% of $525,000) but this amount still applies to purchases of primary residences priced above $525,000.
3. If you are purchasing a home or condo as a second home or rental property the full 12% will be due. However, if you are creating a rental revenue that is subject to HST (short term rental) in which case you can be eligible for an Input Tax Credit on the HST portion you have to pay. There may be some other circumstances in which you can reclaim some of the HST paid, but we would recommend you contact a good tax lawyer or accontant to determie your exact exposure.
In BC, there is also a Property Transfer Tax, paid by the purchaser of any real estate interest (except leasehold), which amounts to 1% of the first $200,000 of the purchase price and 2% of the balance of the price above that leve. Some exemptions also apply.
For more information about this affects your home purchase, please contact us at email@example.com or call 250-808-5508. Please keep in mind that we, at the Bo Knows Homes Real Estate Team are Realtors, not lawyers or tax accountants, so this information is not offered as a professional opinion, but rather as a a quick guide to how these taxes affect you, as we understand them.