On July 23, 2009, British Columbia announced its plans to implement a Harmonized Sales Tax ("H.S.T.") for B.C. effective July 1, 2010. The H.S.T. is a combination of the 7% Provincial Sales Tax ("P.S.T.") with the 5% federal Goods and Services Tax ("G.S.T.") for a single sales tax rate of 12%.

For consumers, goods and services (with some exceptions) will be subject to the H.S.T. in the same manner as they are currently subject to GST. This applies to real estate as well.

For both used and new homes, there are some extra costs for buyers or sellers but these are for the services required to buy or sell, not on the price of the home.

Buyers of used residential real estate can expect to pay H.S.T. on items such as home inspectors, appraisals and other such services. Lawyer fees will not change as they have been forced to charge P.S.T. for years.

Sellers of used residential real estate can expect to pay H.S.T. on realtor commissions, and any other services they may use (we can’t think of any).

H.S.T. has different implications for used residential real estate and new residential real estate. There are also different rules for commercial properties, mobile homes and other types of real estate. Below is an explanation of each situation.

 

There is no H.S.T. on the price of used residential real estate, much like the current rules regarding G.S.T. There are no extra closing costs on the purchase or sale of a used residential house, subject to the comments above.

 

Here is where the costs will increase.