Greg & Colin Thornton RE/MAX Sabre

Colin Direct: 604-561-3306 | EMAIL info@thethorntongroup.ca |

Categories

Today we are back to the PST. So how does that affect home buyers?

Tue Mar 12, 2013 12:01am PST

 

Most B.C. residents will reap no tax savings if they postpone buying a home until the provincial government officially eliminates the harmonized sales tax and reinstitutes a provincial sales tax (PST) on April 1.

 

 

Homebuilders are hammering away at this message in an attempt to eliminate confusion among consumers, who wrongly believe that they will save tax if they wait to buy a new home.

"Builders are frustrated with the confusion in the public," said Bob De Wit, who is CEO of the Greater Vancouver Home Builders' Association. "It's a complicated issue."

Cost savings on the purchases of new homes after the PST is re-instated April 1 will be limited to those priced above $850,000, said Mackay LLP director of income and commodity taxation Tom Baybutt. New homes are currently taxed the equivalent of 7% – not the full 12% HST – on the first $850,000. Every dollar above that threshold is taxed at 12%.

After April 1, buyers of new homes will have to pay the 5% goods and services tax (GST) and a 2% transitional tax on the cost of their home regardless of how expensive it is. But the transitional tax kicks in only if the home's construction is at least 10% complete. Builders of those homes are then reimbursed for the 7% PST that they will have to spend on the building materials that go into the homes.

Pre-sales and other homes that are at least 90% built after April 1 will not be subject to the transitional tax, and builders will not be eligible to apply for rebates on the 7% PST that they spend on building materials for those homes. (See link for downloadable PDF infographic.)

The 2% transitional tax will be phased out on March 31, 2015.

Baybutt pointed out that, after April 1, real estate commissions, which are subject to 12% HST, will be subject only to 5% GST.

The tax on legal fees, however, will not drop after April 1 because they are subject to the new PST. Condominium fees, such as move-in fees, are not taxable under either the HST or the future GST-PST system. •

Comments:
No comments

Post Your Comment:

The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Real Estate Board of Greater Vancouver (REBGV), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the REBGV, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the REBGV, the FVREB or the CADREB.