There are many issues out there today that is affecting the Vancouver Real Estate Market. Changes to the financing rules, “bubble” verses “no bubble” debate, negative media and perhaps one of the most top of mind issues the “Harmonized Sales Tax” (HST). HST has been with us now for almost 3 months and still people are confused about it. What is it charged on? What rebates are available?...
There are many different opinions regarding HST, but whether you are for or against it is not what we will debate here.
What I do want to make clear for real estate is that, at the end of the day, the HST is NOT a 12% tax on your new home purchase.
We see many people in our presentation centres across the lower mainland and what we're hearing about the HST is that people really don’t understand it. The government has not done a good enough job educating how it will affect each market segment – whether car sales, coffee shops, restaurants, or real estate. In the case of real estate, we’re being told that most people believe the HST to be a 12% addition to the purchase price. Very few people understand the actual amount of the HST is actually more like 2% and that there are rebates available which in some cases can net the additional impact to 0%. Some developers; such as at Vinterra in South Surrey, are even offering to pay the differential between the earlier PST and the new HST. Regarding the actual process of applying for the rebates, most buyers also don’t understand that your lawyer will do it all for you at closing time. Yes, you will need to pay the full amount of HST at closing - but a number of rebates will come to you in 6 to 8 weeks after completion on your home.
To help better understand how the new HST model works, I have provided a few different home price scenarios to illustrate what the actual casts are to you buying a new home today. Have a look at the bottom corner of each example and you will see that you increase in tax is a fraction of the 12% HST. This percentage is the percent increase over the previous tax assessment on a new home.
At the end of the day the saying goes “Nothing is certain but death and taxes.” HST, I believe, is here to stay regardless of the efforts of Mr. Vander Zalm. The bigger question is asking: how can I put this system to work for me? By understanding how the HST works, what rebates are available and doing your research on what sales incentives are out there, you can still get a very good deal on real estate.
Some resources for you to learn more:
To be fair and to make sure you have both sides of the story here is an anti HST site.
Dan Thomson
