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What does the move back to GST/PST mean for new home buyers?

April 9, 2013

April 1, 2013 marked the official switch back to GST/PST away from HST. For most industries, the change is immediate and you should have already seen a difference in your bills and receipts. For new housing however, it is a bit more complicated and can be confusing. Here are the basics:

Now that we are past the April 1, 2013 date, when you buy a new pre-sale home in British Columbia:

  • You will be paying GST and not HST.
  • A 2% BC Transition Tax is applicable if construction is more than 10% complete as of April 1, 2013 and you take ownership of your home prior to April 1, 2015.
  • If construction is less than 10% complete and you take ownership of your home after April 1, 2015 you will pay GST only with no transition tax.

There is a Federal New Housing Rebate available for those who will use their property as their primary residence for a minimum of one year. This rebate effectively reduces the amount of GST you have to pay and is valued at a maximum of $6,300 for a home with a purchase price of $350,000. The rebate is gradually reduced for homes valued from $350,000 to a maximum value of $450,000. Homes valued in excess of $450,000 do not qualify for the Federal New Housing Rebate.

There are also a few other rebates and programs available, particularly for first time home buyers so it’s always a good idea to speak with your lawyer. Your lawyer will also be able to provide more information on the transition tax and the switch back to GST if you have questions. There is also a great deal of helpful information for homebuyers online through CMHC (Canadian Mortgage and Housing Corporation) and Canada Revenue Agency.

[Pictured: Vantage by Embassy in the Brentwood neighbourhood of Burnaby is almost complete (Vantage's homeowners will be starting to move in next week) which means if you buy a new home now at Vantage it will be subject to 5% GST + 2% transition tax instead of 12% HST before any applicable rebates – and you can move in this April!*]

*More information on the BC Transition Tax and the change back to GST is ongoing and subject to change. Speak to your lawyer at time of completion for the most up to date information from both the Federal and Provincial government.

  Source: Elimination of the HST in British Columbia in 2013 – Transitional Rules for Real Property Including New Housing November 2012 issued by the Canada Revenue Agency.