The HST and home buyers

August 13, 2009

A recent release by the real estate board of Greater Vancouver helps to shade some light on the impact of HST on new homes.

The harmonized sales tax (HST) will combine the 7% provincial sales tax (PST) with the 5% federal GST into one 12% harmonized sales tax (HST) as of July 1, 2010.

Right now, a buyer of a new home pays a 5% GST. Qualifying home buyers can apply for a rebate of 36% of the GST paid on the first $350,000 of the new home price, and a partial rebate for a new home price of $350,000 to $450,000.

New Home – includes all taxes and federal and provincial rebates

Base new home price

Pre HST Current total new home price

July 1, 2010 on new home price – less embedded PST @ 2%

July 1, 2010 on new home price – no builder PST reduction

$350,000 $361,200 $360,980 $368,200
400,000 416,850 415,964 424,850
450,000 472,500 474,118 484,000
500,000 525,000 529,020 540,000
600,000 630,000 638,824 652,000
800,000 840,000 858,431 876,000

When the HST is in force next summer, a buyer will pay a 12% HST on a new home. A buyer of a home priced at $400,000 or less will receive a rebate of 5% to a maximum of $20,000. A buyer of a new home priced at more than $400,000 will receive a flat rebate of $20,000.

  • Today, a buyer of new home priced at $600,000 will pay $630,000, which includes the 5% GST ($30,000).
  • After July 1, 2010, that same home will cost a buyer $638,824. This includes the 12% HST ($70,588) minus the $20,000 rebate and minus the embedded 2% PST ($11,765) that builders will be able to claim as new input tax credits, the value of which may be passed onto the buyer.

Click on this link for more info on BC’s HST, and how it will affect new home buyers.

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