Confused about how HST Applies to Real Estate?
Confused about HST and real estate? Let’s break it down…
1. If you are purchasing a previously owned home, the HST will not affect you. Previously, there was no GST or PST on older homes, and under the current system there is no HST.
2. If you are purchasing a new home or substantially renovated (more than 90% by an owner-builder), HST will apply to the purchase price. Previously, there would be GST (minus rebates), but no PST. Therefore, the application of HST represents a 7% increase to the purchase price of a new home (discounting any assumed embedded PST under the previous system).
There are, however, certain rebates you can take advantage of.
i. If the purchase price of your new home is less than $450,000 and it will be your primary residence, you should qualify for the federal portion of the new housing rebate. If the purchase price is less than $350,000, the rebate is 36% of the GST portion (equalling 1.8% of the purchase price) to a maximum of $6300. If the purchase price is between $350,000 and $450,000, the rebate is calculated on a sliding scale (from $6300 to zero as the purchase price increases).
ii. If the new home you are purchasing is to be used as either your primary residence or a rental property (not a recreational property), you will qualify for the provincial portion of the new housing rebate. This is 71.43% of the PST portion of the HST (approx. 5%) to a maximum of $26,250. For a property priced over $525,000, the flat rebate is $26,250.
3. If you are selling a property, HST will apply to any real estate commissions. (Previously, there was GST but no PST payable on real estate commissions.)
Still confused? I am happy to send you more information. Canada Revenue Agency or a qualified accountant will also be able to answer your questions.
For more information on HST rebates on housing, visit http://www.hstinbc.ca/making_your_choice/faqs/new-housing-rebate/new_housing_rebate (Provincial)
and http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/cnstrctn/by-eng.html (Federal)
For a calculator to estimate HST and PTT payable on the purchase of a new home, visit http://www.hstinbc.ca/buying_goods/buying_a_home/
While included information is deemed to be correct as of May 2011, it is not guaranteed. Anyone reading and relying on this information should perform his or her own due diligence as to its accuracy. Please virify with Canada Revenue Agency.