Rss Feed
Tweeter button
Facebook button
Linkedin button
Delicious button
Digg button






What You Need to Know About the NEW BC HST Transitional Rules and NEW BC HST Rebate on New Homes, Secondary/Recreational Property Outside of Greater Vancouver/Victoria > Transitional B.C. HST Rules between April 1, 2012 and April 1, 2013

BC HST Transitional Rules for 2012 and 2013.

New BC HST Transitional Rules Come Into Effect April 1st, 2012

Announced in mid February 2012, the new BC HST Transitional Rules for 2012 – 2013 have given the new home buying market certainty in the tax structure moving forward. As British Columbians voted against the HST in mid 2011, the BC Government decided to wait and discuss the transitional rules for the HST tax on newly built property in the province. Because of this delay in response, many BC and Vancouver real estate professionals and analysts warned that a ‘housing bubble’ was being created as home buyers decided to postpone their purchase until more certainty was announced on the BC HST Transitional rules.

The February 17th announcement by Finance Minister Kevin Falcon was very important in injecting confidence in the BC and Vancouver real estate market, which has seen a sudden drop in sales numbers over the past 12 months, while prices continued drifting higher in many parts of the Lower Mainland. At the same time, outside of Victoria and Vancouver, BC property prices continued to drift lower, amidst fewer buyers and increased inventory during the original build out in the mid 2000s. As announced by Kevin Falcon, Finance Minister, the taxes on new property would be kept equitable throughout the transition from the BC HST back to the PST tax. Here are more details on the 2012 BC HST Transitional Rules as stated in February 2012.

Transitional BC HST Rebate for new homes and recreational property announced by Kevin Falcon Finance Minister.

In a Nutshell > Transitional BC HST Rules

> BC to return to PST (from HST) on April 1, 2013
> New BC HST Transitional Rules apply April 1, 2012 to April 1, 2013
> New homes will be subject to only the BC portion of the HST (this means that 2% HST is applied, rather than the full 7% HST, as 5% HST was federal tax)
> The BC HST Rebate threshold has been increased from $525,000 to $850,000
> The maximum BC HST Rebate is now $42,500 compared to $26,250 (this represents a 60% increase)
> Finance Minister Kevin Falcon believe that 90% of new homes in BC are below the threshold limit
> Government of BC believes the Transitional BC HST rules will save new homebuyers $60 million during the transition
> The lowered HST tax is only applicable to new homes (not re-sale, as before)
> The BC HST Transitional Rules and Rebate are now applicable to new secondary residences and new recreational property outside of Greater Vancouver and Greater Victoria
> BC will return to the PST on new property as of April 1, 2013
> No new BC HST Transitional Rules have been applied to home renovations (renos)
> The temporary housing transition measures will be in place for two years, until March 31, 2015. The tax only applies to homes where construction begins before the transition date and ownership and possession occur after.
> The temporary housing transition tax and the temporary housing transition rebates will be administered by the Canada Revenue Agency on behalf of B.C. The Province is administering the grant for new secondary vacation and recreational homes.

New B.C. HST transition regulations announced February 17, 2012.

BC HST TRANSITION TIMELINE BACK TO THE PST

The province of British Columbia will return to the Provincial Sales Tax (PST) of 7% on April 1st, 2013, which apparently reflects the fastest transition between the current HST back to the original PST.

> The BC HST portion will continue to apply before April 1, 2013. Purchasers will be eligible for the new higher BC HST new housing rebate, of up to $42,500, and builders will continue to claim input tax credits.
> The BC HST portion will no longer apply to newly built homes where construction begins on or after April 1, 2013. Builders will once again pay seven per cent PST on their building materials. On average, about two per cent of the home’s final price will again be embedded PST.
> For newly built homes where construction begins before April 1, 2013, but ownership and possession occur after, purchasers will not pay the seven per cent provincial portion of the BC HST. Instead, purchasers will pay a temporary, transitional provincial tax of two per cent on the full house price. This ensures equitable treatment among purchasers and will help mitigate distortive market behaviour. Builders will receive temporary housing transition rebates to offset PST on materials to help prevent double-taxation on homebuyers.

BC HST Rebate Applicable to Higher Threshold

However, between April 1, 2012 and April 1, 2013, added measures have been implemented to help first time homebuyers, new home buyers and builders of new homes in the province. Effective as of April 1, 2012 is the first BC HST Transitional Rule change which will increase the threshold for the BC new housing rebate to $850,000. According to Kevin Falcon Finance Minister, this $850,000 BC HST Transitional Rule housing rebate will pertain to almost 90% of all property in the province of British Columbia and the majority of new Vancouver real estate for sale. By increasing the HST housing rebate threshold to $850,000, the maximum BC HST rebate is now $42,500.

BC HST Rebate Applicable to Recreational Property & Secondary Residences Outside Greater Vancouver & Victoria

In addition, the new HST Rebate under the new B.C. HST Transitional Rules for April 1, 2012 to April 1, 2013 will also be applied to new residential property outside Greater Vancouver and Greater Victoria IN ADDITION TO recreational property, secondary residences and recreational homes in the province. The original BC HST Rebate was only applied to primary residences under $525,000. Now, the new B.C. HST Transitional Rules have allowed the same BC HST Rebate to be applied to both secondary and recreational properties. This is great news for new home builders and purchasers of these properties as the maximum BC HST rebate is now $42,500 for these developments as well.

THE RESULT of the BC Transitional HST Rules

What these major announcements provide is certainty in costs for both home builders as well as new homebuyers who have been anxiously awaiting news from the BC Finance Minister. For both services and goods that are subject to PST, the Provincial Sales Tax will be applied where tax becomes payable on or after April 1, 2013. The full PST legislation for 2013 will be announced in Spring 2012.

2012 Harmonized Sales Tax in British Columbia.





Tags: , , , , , , , , , , , , , , , , , , ,