HST and HST Rebates on the Purchase of New Housing.

THE HST

The government of British Columbia implemented the HST on July 1,2010. The HST consists of the combination of the 7% PST and the 5% GST. This combined 12% tax is called the HST.

The HST applies to all purchases of newly built residential homes and substantially renovated homes.

Used (i.e. resale) residential homes are not subject to HST.

REBATES

There are potentially 3 rebates available to purchasers of new housing.

The GST New Housing Rebate or the GST New Residential Rental Rebate will refund up to 36% of the 5% GST. A full rebate is available for homes up to $350,000.00. Between $350,000.00 to $450,000.00 is a gradual pro-rated reduction of the rebate. Homes above $450,000.00 do not qualify for any rebate of the GST.

The second rebate is the BC HST Rebate. The BC HST Rebate is 5% of the purchase price up to a maximum rebate amount of $26,250.00. Any home with a purchase price of over $525,000.00 will have a maximum BC HST Rebate of $26,250.00.

The third potential rebate is the BC PST Transitional Rebate. This rebate is to adjust for PST that was embedded in the construction of new homes before June 30,2010. This rebate only applies to new single family/detached house and does not apply to the purchase of new strata housing.

The BC PST Transitional Rebate will refund up to 2% of the purchase price of a new house depending on the level of completion as of July I, 2010. In a straight forward example, if the house was 100% complete as of July 1,2010 and the purchase price was $600,000.00, then the BC PST Transitional Rebate would be $12,000.00.

IMPORTANT NOTE ABOUT REBATES

This is important to note as, on occasion, clients assume that the above rebates are automatically adjusted for on the statement of adjustments on completion. This is incorrect.

The developer must explicitly set out in the contract that they will adjust for any rebates on the statement of adjustment upon completion. If there is no such clause, then the buyer will need to submit the rebate application themselves and wait to receive the rebate much later in the mail. This can cause problems for the buyers who are relying on the rebate adjustment to complete the purchase.

Cat: Vancouver Real Estate, HST Rebate