HST
Facts on HST and how it will affect BC Real Estate
December 9, 2009 by Laura Howren · View Comments
How will the new Harmonized Sales Tax affect Real Estate purchases in Vancouver? This is a question that I been recently asked over and over. My answer is not as much as most people think.
HST is a 12% sales tax that will be implemented in July of 2010. This tax will replace the current 5% government sales tax combined with the 7% provincial sales tax that currently exists. Listed below are the key facts that will influence your Vancouver Real Estate purchase:
1. HST will affect the purchase of NEW homes. Currently there is only a 5% federal tax for the purchases of new contruction. This tax will be replaced by th 12% HST as of July 2010.
2. The government has announced that any new properties costing up to $525,000 will be exempt from the new tax. The original government proposed amount was $400,000. This represents a 30% increase in the exemption amount.
3. For new construction costing more than $525,000, the government has announced a provincial tax rebate program for the HST paid on a new home purchases. This amount has increased to $26,250 from the original $20,000 rebate announced when the proposed HST was originally released to the media. Again, this represents a 30% increase.
4. HST will be applicable to the costs and fees associated with a Real Estate transaction. This will include fees regarding any home inspections, legal work, comissions and any other closing costs that are part of a Real Estate purchase.
5. HST will also be applicable to many monthly costs associated with running a household. These costs include monthly strata fees, cable, internet, gas and electricity just to name a few.
The question that you are probably asking yourself righ now is “Will there be anything exempt from HST?!?” The answer is, “Not much”. I say this in regards to all pruchases not even related to Real Estate.
In saying that, unless you are planning on purchasing new construction, HST will not affect you a whole lot. Real Estate transactions that are not new construction will be exempt from HST. In this case, the only additional tax costs will be on costs/fees associated with the transaction.
