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.