We all have questions about the new Harmonized Sales Tax (HST), so here’s the scoop & how it will effect you as a homebuyer.

If approved, the HST will become effective July 1st, 2010.  It is a combination of the 7% provincial sales tax (PST)  with the 5% federal goods  and services tax (GST).

As proposed, the HST will increase the cost of buying or selling all types of property and becomes essentially an additional tax on home ownership. REALTOR® commissions, appraisals and other services will be subject to a 12% HST, replacing the 5% GST now charged, and new homes will be subject to the full HST.

To offset the increase in costs, the BC Government plans to offer a partial rebate of the HST for new housing, intending that new homes up to $400,000 should bear no more tax than under the current PST system. Homes above $400,000 will receive a flat rebate of $20,000. New home sales over $400,000 will be dramatically impacted, as buyers will have to pay an additional seven per cent tax on amounts over $400,000.

The BCREA is recommending a number of changes be implemented to the HST before it comes  into effect.   Their  goal is to  alleviate  costs to the homebuyer.

Prospective homebuyers took advantage of historically low mortgage rates through the summer months, fuelling a rebound in housing activity in BC across Canada.

The BC Real Estate Associations (BCREA) expects a low interest rate environment to persist through 2009 and into 2010.

Mortgage rates are forecast to fluctuate within a narrow range near current levels for the remainder of the year, before rising modestly through 2010 as the economy improves.

Unit sales of single family properties in September of 2009, are up significantly over September of 2008 showing a 36 per cent increase according to MLS® sales summary data released by the Vancouver Island Real Estate Board (VIREB) for September 2009.

“Increasing sales from this time last year and the decrease (22%) in units listed during this period indicates more balance and a stabilizing of the market. Consumer confidence, especially for first time buyers, remains high, fuelled by the very low interest rates. Real estate continues to lead the way in economic recovery,” says VIREB President Ray Francis. “We are seeing this stability with greater volumes reflected by the more balanced market. While sellers and buyers need to remain realistic about pricing these are all very positive signs”