New HST and Real Estate
On July 23, 2009, Premier Gordon Campbell and Finance Minister Colin Hansen announced that the provincial and federal
governments will combine the 7% provincial sales tax (PST) and the 5% federal GST into one 12% harmonized sales tax (HST), effective July 1, 2010.
They explained that over the long-term, the HST would lower business costs and boost investment, which would improve productivity, economic growth and the province’s competitiveness.
Many people want to know how much the HST will add to the cost of a home. It’s not good news. Buyers of new homes will pay a 12% HST on top of the purchase price, instead of the 5% GST currently charged on new homes. A 5% rebate on the HST will be available to a maximum of $20,000 for homes priced at $400,000 or greater, with the GST rebate remaining in place. Paying 12% HST, instead of just 5% GST clearly impacts the affordability of new homes. The 12% HST will also be charged on a broad range of goods and services, some not previously subject to the PST. These include home renovations, heating bills, electricity bills, closing costs, moving costs and REALTOR® fees. The increase in the price of these real estate related services further erodes affordability for all homes, both new and resale.
Members have also asked how the HST will impact pre-sales that complete after July 1, 2010. The government hasn’t yet
passed the HST into law and because of this they haven’t yet hammered out the details of how to handle pre-sales.
The HST will negatively impact home owners trying to go green. Currently, the provincial government offers PST tax
breaks for energy efficient home improvements, such as buying and installing high efficiency furnaces, water heaters, windows, doors, skylights and insulation. Under the proposed HST, these exemptions will likely be gone.
It all adds up to too many taxes from the same taxpayer. Given the impending impact of HST on the real estate industry,
I’ve noticed a recent increase in business. Potential home buyers are looking at the rising cost of a home come July 1, 2010, and they are picking up their phone and calling their REALTOR® in hopes of beating the HST.
I don’t like the HST. The taxes it will add are a disincentive to both affordable home ownership and to greening our homes and environment.
For more information, please click New HST and Real Estate