Home renovations have also seen a decline since the implementation of the HST, as consumers continue to hold back on major purchases until the PST is reinstated.In addition to the stalls in building projects, the industry is anticipating that more than 8,000 potential construction jobs will be put in jeopardy along with roughly 250,000 related jobs annually–for which the industry is seeking compensation from the government.In response to the stall surrounding the PST the Urban Development Institute is proposing to the provincial government that there be transition rules created to address the move from the HST back to the PST/GST system. The UDI is also suggesting that rebate cheques be offered to consumers who purchase homes above the $525,000 mark and that the threshold be raised to encourage more new home purchases up until the HST is removed.

UDI’s president Don Forsgren is hoping that by looking into transition strategies and minimizing the continued negative effects of the HST on the housing industry that consumers will continue to purchase new homes in the interim rather than holding off until 2013. Representing more than 550 BC developers, the UDI will continue to lobby the government for assistance in this tumultuous season.

With the BC HST Price Difference, What Major Impact Does That Have on First Time Homebuyers?

Although an increase in purchase price of 2 to 5% may not sound like much, we are still talking about thousands of dollars. The new home BC HST tax increase is very substantial even for a small condo that costs $300,000. Do you know of many Vancouver first time homebuyers who can pay an extra $6,140 in BC HST on their new home upon closing? Remember that the major banks are unlikely to finance a 12% HST tax burden, which basically means that the first time home buyer will need to cover the BC HST price difference. Coming up with an extra $6,140 is tough enough, but when it comes to this new home BC HST tax increase for first time homebuyers, it is money out of their wallet that does not even increase the value of their home. The implication of the BC HST price difference and extra tax burden is that many first time homebuyer in Vancouver and British Columbia will stay away from the new construction housing market. The costs and the new home BC HST tax increase for first time homebuyers is too high, forcing many purchasers to either wait and rent for a while or to purchase resale Vancouver property instead. The secondary effect of the new BC HST price difference on new homes is that with fewer first time homebuyers driving the new housing market, the construction industry is likely to suffer. BC new housing sales and construction will drop, forcing many people in the industry to move out of the province or to seek alternate employment.

Not a single new home sold! September 2011
Not one single new home sold in September on the west side of Vancouver. The significance of this cannot be understated. For the past couple of years Vancouver’s west side housing market (along with that of the Vancouver suburb of Richmond) have been red hot. Back in March of 2011, Real Estate Board of Greater Vancouver president Jake Moldowan said in an interview that “it’s a huge sellers’ market, the strongest in those areas I’ve ever seen. And there’s no question that it’s the offshore market that’s focused on these two areas.”According to the March 2011 report by the REBGV, demand for detached homes remained strong across the region, with particularly high sales volumes and price increases in Richmond and Vancouver’s west side. In fact Moldowan said that it’s single detached homes in Richmond and Vancouver’s west side that are the most sought after properties in the entire Lower Mainland marketplace. September 2011 marks the first ‘no new home sale’ month on the west side of Vancouver since records started been complied in 1994. Even the minicrash of 2008 saw four sales of new homes on the west side.”This information has been obtained from sources deemed to be reliable and while thought to be correct is not necessarily guaranteed.”

Original contents from Angel Wang & Helen Pan Team|Vancouver Real Estate Agents - Top 25 Real Estate Agents in Vancouver West,Downtown Vancouver and West Vancouver. Buy & Sell residential homes, property management, pre-sale and more.

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 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.

Original contents from Angel Wang & Helen Pan Team|Vancouver Real Estate Agents - Top 25 Real Estate Agents in Vancouver West,Downtown Vancouver and West Vancouver. Buy & Sell residential homes, property management, pre-sale and more.

Original contents from Angel Wang & Helen Pan Team|Vancouver Real Estate Agents - Top 25 Real Estate Agents in Vancouver West,Downtown Vancouver and West Vancouver. Buy & Sell residential homes, property management, pre-sale and more.