BC back to GST ~ What that means for buyers of new homes

By Cameron McNeill, Owner of MAC Marketing Solutions

April 1st, 2013 marked the official switch back to GST/PST away from HST.  For most industries, the change is immediate and you should have already seen a difference in your bills and receipts.  For new housing however, it is a bit more complicated and can be confusing. Here are the basics:

If you are purchasing a home after April 1st, 2013:
›› You will be paying GST and not HST.
›› A two per cent BC Transition Tax is applicable if construction is more than 10 per cent complete as of April 1st, 2013 and you take ownership of your home prior to April 1st, 2015.
›› If construction is less than 10 per cent complete and you take ownership of your home after April 1st, 2015 you will pay GST with no transition tax.

There is a federal New Housing Rebate available for those who will use their property as their primary residence for a minimum of one year.  This rebate effectively reduces the GST and is valued at a maximum of $6,300 for a home with a purchase price of $350,000.  The rebate is gradually reduced for homes valued from $350,000 to a maximum value of $450,000. Homes valued in excess of $450,000 do not qualify for the New Housing Rebate.  

There are a few other rebates and programs available, particularly for first time home buyers so it’s always a good idea to speak with your lawyer. Your lawyer will also be able to provide more information on the transition tax and the switch back to GST if you have questions. There is also a great deal of helpful information for homebuyers online through CMHC (Canadian Mortgage and Housing Corporation) and Canada Revenue Agency.

Source: New Condo Guide & Elimination of the HST in British Columbia in 2013 – Transitional Rules for Real Property Including New Housing November 2012 issued by the Canada Revenue Agency.

More information on the BC Transition Tax and the change back to GST is ongoing and subject to change. Speak to your lawyer at time of completion for the most up to date information from both the Federal and Provincial government.