Just when we got comfortable working with HST we now must navigate the waters back to GST/PST. The past few weeks have been interesting as lawyers, accountants and the rest of us try to make sense of the transition rules back to GST/PST and how it affects each of us individually.
So how do the rule changes affect homebuyers?

• If you are buying a resale home or have recently then the good news is that resale homes are generally not GST or HST applicable. GST or HST have applied to brand new homes or substantially renovated homes.
• Most of the transition rules back to GST are based on completion. Completion is when title of the home is transferred from one to another (not when an offer of purchase and sale is agreed upon).
• Transition to GST officially takes place for new homes that complete on or after April 1, 2013. That means until then, you are still HST applicable.
• After March 31, 2013 until March 31, 2015, when you complete on a new home you will be GST applicable and subject to a transition tax of 2% of the purchase price. This transition tax is to cover the cost that builders were no longer paying under the HST system during construction.
• When you complete on your home after March 31, 2015 you will be GST applicable with no transitional tax payable.
• The BC New Housing Rebate is currently set at 71.43% of the PST portion of HST (7%) to a maximum of $26,250 on homes $525,000 or less. As of April 1, 2012 this rebate has been increased to 71.43% of PST (7%) to a maximum of $42,500 on homes $850,000 or less where HST is applicable. Therefore, if you complete on your new home between April 1, 2012 and March 31, 2013 you may be eligible to qualify for this increased rebate amount.
• The Federal GST New Housing rebate is also available for homes under $450,000 to a maximum of $6,300. This rebate has had no change thus far based on the transition back to GST/PST.
• For first-time buyers there is also a temporary $10,000 bonus. If you qualify, you can receive a personal income tax credit up to $10,000 for homes which complete between Feb 21, 2012 and March 31, 2013. 

There are many more rules involved in reverting to the GST/PST system but for homebuyers the above rules are to give you a general understanding. Every situation is different however so I encourage you to speak with a lawyer to fully understand your personal perspective. The good news is that we finally have some clarity to move forward with and are looking forward to putting the HST questions to rest.

Cameron McNeill

The information above is for general purposes only. Please verify with a lawyer as personal situations will vary.