An Update on HST And Housing

20 November 2009

An Update on HST And Housing

Posted by Ryan Coffey under: Buying; Nanaimo Real Estate Market; selling .

Regular readers will remember this post where I outlined my concerns about HST and the effect it will have on the housing market, and in particular those people who make a living from building homes.

Today I received an announcement from the local real estate board that updated us on the issue’s development and it seems there has been some improvements made but I am still concerned about the effect it will have on builders in higher priced areas like Vancouver and Victoria as $525,000 isn’t very much for a new home there. Here in Nanaimo though, that’s a pretty nice home, even for a new one.

I am still concerned though that as Realtors, this will mean a 7% increase in what it costs to hire us. This will affect our industry. There are also the high end builders who will now be trying harder than ever to build home that come in under the wire of $525,000.

The announcement in question follows:

Ryan Coffey

HST transitional rules on housing

Wednesday, the provincial government announced the HST transitional rules on housing. The press release and backgrounder can be found here: http://www2.news.gov.bc.ca/news_releases_2009-2013/2009FIN0017-000647.htm

In the announcement, Finance Minister Colin Hansen acknowledged consumer and industry input on the issue. The province is proposing to increase the threshold for the B.C. HST new housing rebate from $400,000 to $525,000. The province aims to ensure that, on average, purchasers of new homes up to $525,000 pay no more tax due to harmonization.Purchasers of new homes would be eligible for a rebate of 71.43 per cent of the provincial portion of the HST paid on a new home, up to a maximum of $26,250. Homes above $525,000 would receive a flat rebate of $26,250. This is a 30 per cent increase in the threshold and maximum rebate available.

The full text of the Tax Information Notice on new housing HST rebates can be found here: http://www.sbr.gov.bc.ca/documents_library/shared_documents/HST/new-housing-rebates.pdf

Please take the time to read through the whole document if you can. Some highlights from the Tax Information Notice:

Generally, builders’ sales of newly constructed or substantially renovated homes would be subject to the provincial component of the HST where both ownership and possession of the home are transferred after June 2010. Grandparenting would be provided for certain contracts.
The proposed transitional rules for new housing, including builder reporting and disclosure requirements, would be administered by the CRA.
Generally, sales of new homes under written agreements of purchase and sale entered into on or before Nov. 18, 2009, would be grandparented, such that these sales would not be subject to the provincial component of the HST and would not be eligible for B.C.’s housing rebates.
Grandparenting would be provided for newly constructed or substantially renovated single unit homes, including detached homes, semi-detached homes, and attached homes.
Grandparenting would not apply to traditional apartment buildings, mobile homes (including modular homes) and floating homes, as the general transitional rules would apply differently to those homes. However, these homes may qualify for B.C. housing rebates.

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