TAX Transition Time
Farewell HST … Welcome Back GST/PST
The BC government imposed it in 2010, voters rejected it in 2011 and in a matter of two short weeks or so the HST will go down into the history books of BC politics as one of the most controversial, if not contentious, taxes in history. Effective April 1st, the Harmonized Sales Tax will be eliminated and a period of transition will commence with some significant changes in store for our industry, your buyers, your sellers and you as a REALTOR®. Here’s a snapshot of what to look out for leading up to April 1, 2013 and after:
- The 12 per cent HST applies if the possession or completion date is before April 1, 2013.
- The 5 per cent GST applies if the possession and completion dates are on or after April 1, 2013.
- Effective April 1, 2013, builders will pay 7 per cent PST on building supplies and materials.
OUT WITH THE OLD, IN WITH THE NEW
The 2 per cent BC Transition Tax makes its debut April 1, 2013. It’s a tax, albeit a temporary one, your new home buyers need to know about:
- Applicable to the full purchase price of a new home which is 10 per cent or more complete by April 1st and where completion and possession occur on or after April 1, 2013 but before April 1, 2015.
- The additional tax is aimed at providing a more even playing field for buyers of new homes both during and after the HST period.
- New housing transition rules will be in effect from April 1, 2013 – March 31, 2015 and apply to new housing only.
REBATES & INCENTIVES
With the demise of the HST comes the end of the New Housing Rebate program and the commencement of new incentives your new home buyers will want to know as being effective April 1st :
- Properties less than $350,000 will qualify for a full federal GST rebate.
- Properties between $350,000 and $450,000 will qualify for a pro-rated federal GST rebate.
- Properties selling more than $450,000 will be exempt from rebate.
Where your buyer is purchasing a new home as a principal residence, be clear on the Contract of Purchase and Sale to specify whether the buyer will assign the GST rebate to the builder, be credited the rebate at closing or be themselves responsible for paying the GST on closing and apply to the government for the rebate. Your buyer can expect to wait about three months for a rebate to be processed and mailed.