Here it comes! If you are thinking real estate changes in the last half of this year, take a moment to read this short article on HST!
HST in British Columbia
On July 1st 2010 the Provincial Sales Tax in BC is being replaced and harmonized with the GST to create a single 12% tax. The new HST will have impact to those people who are building or purchasing a newly constructed homes or substantially renovated homes, but will not impact those who are purchasing resale homes.
Purchasers of newly built homes will be eligible to apply for additional rebates up to a maximum of $26,250 as a result of the HST. If new home construction spans the July 1, 2010 HST implementation date, further rebates may be available. The aforementioned rebates will largely offset the additional tax that is payable on homes costing less than $525,000. However, the costs will be greater for those who have contracted to build or are purchasing a newly constructed home with a value greater than $525,000.
Many homebuilders have included the costs of HST and the associated rebates under the plan directly into the purchase price. In these cases, the rebates normally available to a homebuyer are assigned to the developer. Information about whether the HST and rebates are included in the purchase price is included in the agreement of purchase and sale.
If the developer has not included the HST and associated rebates into the price of the home being built, homebuyers must apply to the federal government for the rebates and wait for the forms to be reviewed and approved. As a result, these amounts must be financed by homebuyers during the intervening period.
Certain costs associated with buying and selling of homes will also be impacted. Such items as legal fees and real estate commissions will now be subject to HST.
For further information about how the new harmonized sales tax may affect new home purchases can be found at this BC Government website link. Included on the website is a new home purchase HST calculator
Of course the best way to understand the impacts of the HST on homebuying plans is to contact a knowledgeable real estate lawyer who will be able to provide advice relevant to specific situations.
Your new home doesn't come with mortgage advice. I do.