The BC Government has announced that it will exclude new homes costing up to $525,000 from its proposed 12 per cent Harmonized Sales Tax (HST) scheduled to take effect July 1, 2010. The government has also increased the rebate of the provincial portion of the HST paid on a new home to a maximum of $26,250. This represents a 30 per cent increase over the original government proposed home price threshold of $400,000 and maximum rebate of $20,000.
This is good news for the Real Estate Board and proof that its lobbying efforts produce results. In October, 2009, the Board asked the government to raise the threshold for the HST on new homes as well as the new housing rebate. Clearly the government listened to the Board and the real estate sector. “We heard the concerns from consumers and industry about how the HST might affect home buyers, and this increase will move the threshold to above the average new home price in the province,” said the Hon. Colin Hansen, Minister of Finance.
A similar rebate will also support the construction or substantial renovation of affordable rental housing. The government has released its proposed Residential Housing New Housing Rebates and Transitional Rules for British Columbia HST, which provides details on new housing rebates including transitional rules for real property. This includes:
Transitional rules: the HST would not apply to sales of new homes where ownership or possession is transferred before July 1, 2010;
Grandparenting: sales of new homes under written agreements of purchase and sale including presales entered into on or before midnight November 18, 2009, would generally not be subject to the provincial portion of the HST, even if both ownership and possession are transferred on or after July 1, 2010. Any home sold on or after November 19, 2009 is subject to HST transitional rules.