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Top 25 Real Estate Agents in Vancouver West,Downtown Vancouver and West Vancouver. Buy & Sell residential homes, property management, pre-sale and more.

What You Should Know About HST Housing Rebate In BC

As you’ve already known that July 1st is the day when the BC provincial government and federal government will combine the 7% provincial sales tax (PST) and the 5% federal Goods and Services Tax (GST) into a 12% Harmonized Sales Tax (HST).

People here in BC had talked or complained about this new tax a lot since the day it’s announced back in Summer 2009. Now is the time to start preparing for this change, no matter what. As a rule of thumb, the GST rules that now apply to residential property will also apply under the HST.

New housing rebate in BC after July 1
New rules about HST housing rebate:

Buyers of new homes will be eligible for a rebate of 71.43% of the provincial portion (7% of the HST’s 12%) of the HST paid on the new home up to a maximum rebate of $26,250. Homes prices at more than $525,000 will be eligible for a flat rebate of $26,250.

The rule is pretty straight forward. But that new rebate of the provincial portion will be for primary residence purchase only. Or if you are a residential property developer or builder, you may qualify for up to $8,663 rebate.

When everybody is talking about the New rebate, people almost forget the Old one. That is the Federal GST new housing rebate, which is 36% of the tax paid on the first $350,000 of the home price. The GST rebate is phased out for homes priced between $350,000 and $450,000.

Here is an example of you buying a new home valued at $1,000,000. If you purchase it now you will get no tax rebate from either BC government or Federal government. And you will pay 50,000 GST. If you purchase it on or after July 1, you will be qualified for $26,250 new housing rebate. But you will pay $120,000 HST.

That’s a big difference! Especially for my potential clients who will most likely invest in properties in Vancouver west side, West Vancouver. Because the housing price is rarely go below $1,000,000 when you invest in single house in those areas.

Another interesting thing about this new housing rebate is…

There is an enhanced provincial New Rental Housing rebate. If you construct or substantially renovate a residential property to rent to tenants, you will be eligible for a rebate up to $26,250 on units priced up to $525,000. There is a flat rebate of $26,250 for units priced above $525,000.

So the interesting thing is: you will not be eligible for any housing rebate if you buy a new property which is not your principal residence and you don’t rent it.

But, if you buy a new rental apartment building and rent all of the units, you will be eligible for a New Rental Housing Rebate for each unit up to a maximum rebate of $26,250 per unit.

Of course, there are always some conditions apply that you want to double check with BC government about new HST rules.

And actually the new HST rule won’t just impact on new home price. Because the overall housing market value, including those previously built homes, will be adjusted to a higher level when the new HST rules apply.