31 July 2009

What HST means for BC real estate

The BC government announced on July 23, 2009 that effective July 1, 2010, BC will adopt the HST, combining BC's seven per cent PST with the five per cent federal GST for a single "harmonized sales tax" of 12 per cent.

Starting next July, we'll be paying a combined 12 per cent on most purchases. The biggest problem with the proposed HST is that it will no longer exempt all kinds of goods and services from the seven per cent provincial sales tax.

The proposed HST will significantly affect home buyers of both new and resale homes. Infact the biggest tax hit could be on those who buy new homes, which were previously exempt from the PST but not the GST.

A person buying a $450,000 resale home will pay over approximately $1,100 more due to the new tax applied to real estate transaction fees. On a $750,000 newly constructed home, a buyer would pay approximately $32,500 more in tax, even with the proposed $20,000 HST rebate on homes over $400,000.

Consumers will have to pay a higher tax on new houses, renovations, REALTORS®' fees and other real estate transaction fees such as notary services, home inspections and appraisals. All of those are currently exempt from the PST and are only subject to the GST. Under the new proposal, they will be subject to a 12 per cent HST tax.

A number of items will still be exempt from the PST portion of the new tax: gasoline and diesel fuel for vehicles, books, children’s clothing and footwear, children’s car seats and car booster seats, diapers and feminine hygiene products.

Why can't we add real estate services to the above list of items that are exempt from the PST portion of HST? Why there was no consultaion with such an important industry group before imposing a huge tax burden? Is this housing market not slow enough for BC Liberals?

Folks, contact your local MLA and ask these questions....