I believe that if there’s one thing you can count on, it’s that things are going to change! With change however sometimes there comes confusion, and I notice people aren’t quite sure about what to expect. So to shine a little light on the topic of purchasing a brand new home and how and when HST does or doesn’t apply, the following is what you can expect to be taxed on and when.
Before April 1, 2013 if you purchase a new home in BC the HST (Harmonized or blended Sales Tax) at 12% applies. Note that a potential rebate of up to $42,500 would be applicable on homes valued up to $850k. The HST was a blend of GST (@ 5%), and PST (@ 7%). As of April 1, 2013 this will change, and the HST will cease to exist.
The good news for buyers is that when purchasing a new home beginning April 1, 2013 only GST will be charged and a potential GST rebate will be applicable on homes up to $450k. A 2% transitional tax may be applied on homes purchased after April 1, 2013 and taking occupancy before April 1, 2015. This 2% represents an embedded fee builders pay on new construction materials.
For more details visit the BC Real estate Association’s website at: http://www.bcrea.bc.ca/government-relations/hst-pst-resources
So while some things do change (HST back to GST on new home purchases), some things do remain the same (HST or GST has never been applicable on the purchase of a resale home, only PTT applies). Weather the HST transition back to the GST/HST formula is a change for better or for worse is always a matter of opinion but the great news for buyers is that the tax on the purchase of new home will soon cost less, so that’s always a change for the better!
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