HST Decoded…A Simple Way to Learn about HST and New Home Purchases

Mike Morisset — Fri, 08 Jan 2010 17:55:56 +0000

HST Decoded
On July 1, 2010 HST will replace GST on New Home Purchases. However, there is a phase in period that must be understood in order to accurately budget for your new home.
If the date of purchase contract is on or before November 18, 2009, GST (5%) will be applied with the same exemptions as have previously been stated, regardless of completion date. If the purchase is made (contract signed) after November 18, 2009, GST (5%) will be applied ONLY if completion is before July 1, 2010. If completion occurs after July 1, 2010, HST (12%) will be applied.
All contracts signed after July 1, 2010 will be subject to HST (12%).
HST Rebates
HST is a harmonized tax comprised of GST (5%) and PST (7%). The Rebate Programs for First Time Home Buyers are computed using two different calculations for the two portions of the HST as follows:
GST rebates are at 36% of GST payable for purchases under $350,000; partial rebate between $350,000 and $450,000; and no rebate on purchases over $450,000.
The PST portion rebate is 71.43% of PST payable up to a maximum rebate of $26,250 (approximate purchase price of $525,000)
In Short
If the purchase price is under $525,000, the purchaser will effectively pay GST (with applicable rebates) plus 2% of the original purchase price (comprised of the PST).
If the purchase price is over $525,000, the purchaser will pay 12% HST less $26,250 in maximum PST rebate.

The True Impact of HST on New Home Purchases

Mike Morisset — Wed, 06 Jan 2010 19:40:11 +0000

We have all heard about the looming HST, but how does it effect the purchase of real estate in British Columbia? Below are some guidelines as to how HST will effect the purchase price of new homes and when to close on new homes to avoid the HST.

For contracts written before November 18th, 2009 5% GST will be charged regardless of when completion is.

For contracts written after November 18th, 2009 that complete before July 1st, 2010, 5% GST will be applied.

For contracts written after November 18th, 2009 that complete after July 1st, 2010, 12% HST will be applied.

Although HST is a combined tax of 5% GST and 7% PST, there are still rebates available for both taxes.
For example:

On a $300,000 Purchase Price
15,000 GST Charged (5%)
21,000 PST Charged (7%)
$336,000 TOTAL

(5,400) GST Rebate
(15,000) PST Rebate
($20,400) TOTAL REBATE

Net Purchase Price with Tax:
$336,000 Total with Tax
($20,400) Total Rebates
$315,600 TOTAL DUE with HST

This new total reflects a 2% increase over what would be paid with GST.

As with GST rebates in the past, there is a maximum HST rebate on the PST portion of $26,200.

Please consult with your Realtor and Mortgage Broker as to the specifics of your situation and how best to prepare yourself for the increase in tax payable on new home purchases in British Columbia beginning on July 1, 2010.

The Mortgage Blog » HST

HST Decoded…A Simple Way to Learn about HST and New Home Purchases

The True Impact of HST on New Home Purchases