To illustrate this, let’s assume a purchaser is purchasing a new home for $500,000.00.
Current Tax Payable
|
Proposed Tax Payable
| ||
G.S.T.
|
H.S.T.
| ||
Purchase Price
|
$ 500,000.00
|
$ 500,000.00
| |
G.S.T.
|
$ 25,000.00
|
$ 25,000.00
| |
H.S.T. additional tax
|
$ -
|
$ 35,000.00
| |
Rebate of H.S.T. (71.43% of H.S.T. additional tax)
|
$ -
|
$ 25,000.50
| |
Total Purchase Price
|
$ 525,000.00
|
$ 534,999.50
|
Note that in the above example the purchaser is paying about $10,000 more with the H.S.T. This is approximately 2% more than under the current G.S.T.
The government states that while sales of new homes in B.C. are not directly subject to the P.S.T., building materials used in the construction of homes are subject to the 7% P.S.T. The total amount of P.S.T., on average, embedded in the selling price of a new home is estimated to be equal to two percent. As a result, the government claims that purchasers of homes priced up to $525,000 would pay no more tax, on average, than under the current P.S.T. This of course assumes that the price of homes drop 2% due to the elimination of P.S.T. on building supplies.
Note also that the maximum rebate is $26,250.00. This means that the extra tax will increase dramatically for homes over $525,000.00. Consider the following example for a home priced at $900,000.00.
Current Tax Payable |
Proposed Tax Payable | ||
G.S.T. |
H.S.T. | ||
Purchase Price |
$ 900,000.00 |
$ 900,000.00 | |
G.S.T. |
$ 45,000.00 |
$ 45,000.00 | |
H.S.T. additional tax |
$ - |
$ 63,000.00 | |
Rebate of H.S.T. (maximum of $26,250.00) |
$ - |
$ 26,250.00 | |
Total Purchase Price |
$ 945,000.00 |
$ 981,750.00 |
Using the above example, the purchaser of a new home priced at $900,000 will pay an additional $36,750.00 with the imposition of the H.S.T.
Other rebates
New housing rebates would be available for the provincial component of the H.S.T. paid for all types of housing eligible for G.S.T. new housing rebates. This includes rebates for the following:
New housing rebate – for purchasers of new houses together with leased land
New housing rebate – for purchasers of new mobile homes and floating homes
New housing rebate – for houses acquired through the purchase of qualifying shares in a housing co-op
New housing rebate – for owner-built homes
Rather than retyping the government announcement on these rebates, please visit http://www.rev.gov.bc.ca/documents_library/shared_documents/HST/new-housing-rebates.pdf. This has complete details on all of the above rebates. It also has information on rentals of new homes by builder-landlords and purchaser-landlords, as well as transitional rebates for partially constructed homes.
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