Lets be clear at the outset, as a buyer you only pay HST on the purchase of a new home (typically from a developer or builder). Buyers do not pay HST on previously owned/lived in home. Where the HST could affect a transaction is on the Seller’s side of the equation. Sellers will now have to pay HST on Realtor® commission which-is 7% more than the GST they previously paid.
Most of what you have heard about the HST is that it is going to increase costs, as I just outlined concerning sellers and commissions. But, do you know how HST applies to a Real Estate transaction if you are purchasing a new home, and how much of a rebate you can get? Yes, that is correct – a rebate! If the purchase of a new home in BC is $525,000 or less, you get up to $26,250 back. In fact, because of successful lobbying by the British Columbia Real Estate Association (BCREA) the threshold was raised from $400,000 (which was below the new home median purchase price in BC) to $525,000, above the median purchase price of a new home. Because of this action, buyers will not pay any more tax due to harmonization on any new home purchased for under $525,000, because they will get a rebate. Translation: a new home with a purchase price of $525,000 or less will be eligible for a rebate of 71.43% of the provincial portion of the HST paid on the new home, up to a maximum of $26,250. Any new home over the $525,000, still is eligible for the rebate; however, the most the purchaser can receive is the maximum amount of $26,250.
Another devilish detail is that British Columba is staring down the barrel of a referendum regarding HST. We have one year to engage in a dialogue and determine if the HST is the correct move for BC or not. (Seemingly a backwards process…) Politics are at play here and we need to take a straight look at what this really means for the people of BC. I certainly do not agree with what the Liberals did to put the HST into place but the fact is that it is here and already making a difference in our lives. One of the ironies of a referendum on HST is that its looming temporary uncertainty could actually stall BC’s economy. Would you pay a 12% tax when in a few months it could be 5%? If the people of the province feel that there is a chance that they could save paying an inflated HST were the burdensome tax to be repealed in the future, we could see a slow down in consumer confidence and spending. Granted, the previous statement is a long shot, because the government would not and could not simply flip a switch so to speak and put everything back to the way it was, but it will continue to put egg on Gordon Campbell’s face when he’s trying to make positive economic arguments.
While we do not like it, I think the province of BC, unfortunately, is going to have to hold their nose and take their medicine. We are dealing with a consumption tax. It is likely the fairest tax we could have because you only pay it when you spend…. if you are not spending money you are not paying the HST. So the argument can be made is that the people of BC who have more money to spend will be paying more HST.
(Joke) Did you ever hear the one about the Elephant and the Safeway bag? Here is a new twist on it…
How do you get rid of the HST? Put it in a Safeway bag and take the ‘S’ out of Safe and the ‘F‘ out of way…..Ahh Haa! There is NO ‘F’in’ way!