HST Transitional Rules

H.S.T. will be officially eliminated April 1, 2013. To help purchasers of new homes, the provincial government has announced transitional rules until then.

Effective April 1, 2012, buyers may be eligible for a provincial enhanced New Housing Rebate if they buy, as their primary residence, a home (as currently defined) priced up to $850,000. The current threshold is $525,000.

In addition, buyers may also be eligible for a provincial New Housing Rebate if they buy a secondary vacation or recreational home outside the Greater Vancouver and Capital Regional Districts priced up to $850,000.

Buyers of new homes will be eligible for a rebate of 71.43% of the provincial portion (PST) of the HST paid on the new home up to a maximum rebate of $42,500. Homes priced at more than $850,000 will be eligible for a flat rebate of $42,500.

**Keep in mind that the GST Rules will remain the same as before**

Here are the possible scenarios for the PST Portion:

If a buyer enters into an agreement dated on or before April 1, 2012 and they take ownership or possession on or before April 1, 2012, nothing changes:

The buyer will pay the 12% HST and be eligible for a rebate of up to $26,250 on homes priced to a maximum of $525,000. Homes priced at more than $525,000 are eligible for a flat rebate of $26,250.

If buyers have entered into an agreement dated on or before April 1, 2012 and they take ownership or possession on or before April 1, 2013:

They will pay the 12% HST and be eligible for a rebate of up to $42,500 on homes priced to a maximum of $850,000. Homes priced at more than $850,000 are eligible for a flat rebate of $42,500.

If a buyer purchases a presale residential property and they have an agreement dated on or before April 1, 2012 and they take ownership or possession on or after April 1, 2013:

They will not pay the 7% provincial portion of the HST. Instead, buyers will pay a temporary transitional provincial tax of 2% on the full house price. This 2% reflects an embedded PST builders pay on materials.

If a buyer purchases a presale residential property and they have an agreement dated on or after April 1, 2012 but before April 1, 2013, and they take ownership and possession before April 1, 2013:

They will pay the 12% HST and be eligible for a rebate of up to $42,500 on homes priced to a maximum of $850,000. Homes priced more than $850,000 are eligible for a flat rebate of $42,500.

If a buyer purchases a residential property and they have an agreement dated on or after April 1, 2012 and the construction of the home commenced before April 1, 2013, and they take ownership and possession after April 1, 2013:

They will not pay the 7% provincial portion of the HST. Instead, buyers will pay a temporary transitional provincial tax of 2% on the full house price. This 2% reflects an embedded PST builders pay on materials.

If the Contract of Purchase and Sale is signed on or after April 1, 2013, with possession after April 1, 2013:

Only GST is applicable. The HST will generally cease to apply to sales of real property (including residential real property) if ownership and possession of the property transfer on or after April 1, 2013. This will be the case for sales of new housing, irrespective of whether the agreement of purchase and sale was entered into before April 1, 2013 or whether construction of the new housing began before April 1, 2013.

All the same rules apply to recreational property that apply to other residential property.

Please Provide Your Buying Criteria

Chris Frederickson

OAKWYN REALTY LTD.

3195 Oak Street  Vancouver,  BC  V6H 2L2 

Mobile: 604 306 1062

Phone: 604 620 6788

Fax: 604 620 7970

chris@chrisfrederickson.ca