How will the return to PST affect your new home purchase?

New Home Purchases: Transition from HST to PST

 

New Housing Transitional Rules

On Feburary 17th, 2012 the Government announced the transitional rules for returning to the PST. Below you will

find information as well as the detailed tax information notice on these rules.

The housing transition rules help ensure when people buy a newly constructed home under the PST, whether built

entirely under the HST, entirely under the PST, or partly under HST and partly under the PST, they will all pay a

consistent and equitable amount of tax. The transition rules provide certainty for new-home construction and

sales, particularly during the transition period.

For newly built homes where construction begins before April 1, 2013, but ownership and possession occur after,

purchasers will not pay the seven per cent provincial portion of the HST. Instead, purchasers will pay a temporary,

transitional provincial tax of two per cent on the full house price. This ensures equitable treatment among

purchasers and will help mitigate distortive market behaviour. Builders will receive temporary housing transition

rebates to offset PST on materials to help prevent double-taxation on homebuyers.

  • Average amount of embedded sales tax in newly built homes under PST: two per cent.
  • Tax paid by purchasers on an $850,000-newly built home after HST rebate: two per cent.
  • Tax rate on a newly built home during transition: two per cent.


The B.C. new housing rebate threshold will be increased to $850,000, meaning more than 90 per cent of newly

built homes will now be eligible for a provincial HST rebate of up to $42,500. It is important to note that the HST

does not apply to resale housing.

To help support workers and communities in B.C. that depend on residential recreational development,

purchasers of new secondary vacation or recreational homes outside the Greater Vancouver and Capital regional

districts priced up to $850,000 will now be eligible to claim a provincial grant of up to $42,500 effective April 1,

2012.

 

B.C.’s portion of the HST will no longer apply to newly built homes where construction begins on or after April 1, 2013.

 

Builders will once again pay seven per cent PST on their building materials.

 

On average, about two per cent of the home’s final price will again be embedded PST.

 

The temporary housing transition measures will be in place for two years, until March 31, 2015.

 

The tax only applies to homes where construction begins before the transition date and ownership and possession

occur after.

 

The temporary housing transition tax and the temporary housing transition rebates will be

administered by the Canada Revenue Agency on behalf of B.C. The Province is administering the grant for new

secondary vacation and recreational homes.

 

 

To calculate the PST/HST charges on your new home purchase, go to:

 http://www.pstinbc.ca/buying_goods/buying_a_home/new_home_tax_calculator

 

 

See http://www.pstinbc.ca/ for more details on the return to PST!

 

Source: http://www.pstinbc.ca/

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