BC is proposing to increase the threshold for BC HST new housing rebate

The Province is proposing to increase the threshold for the B.C. HST new housing rebate from $400,000 to $525,000 to ensure that, on average, purchasers of new homes up to $525,000 pay no more tax due to harmonization, Finance Minister Colin Hansen announced today.

“We heard the concerns from consumers and industry about how the HST might affect home buyers, and this increase will move the threshold to above the average new home price in the province. At $26,250, this provides the highest maximum provincial rebate in Canada,” said Hansen. “A similar rebate will also support the construction or substantial renovation of affordable rental housing.”

Purchasers of new homes would be eligible for a rebate of 71.43 per cent of the provincial portion of the HST paid on a new home, up to a maximum of $26,250. Homes above $525,000 would receive a flat rebate of $26,250. This enhanced rebate represents a 30 per cent increase in the threshold and maximum rebate available.

The Province is also proposing transitional rules for new housing. The provincial portion of the HST would not apply to sales of new homes where ownership or possession is transferred before July 1, 2010. In addition, sales of new homes under written agreements of purchase and sale entered into on or before Nov. 18, 2009, would generally not be subject to the provincial portion of the HST, even if both ownership and possession are transferred on or after July 1,
2010.

On July 1, 2010, British Columbia intends to adopt the HST, combining a seven per cent B.C. rate with the five per cent federal Goods and Services Tax. At 12 per cent, B.C. would have the lowest HST rate in Canada. It is estimated the HST would remove over $2 billion in costs for B.C. businesses, including an estimated $1.9 billion of sales tax removed from business inputs and an estimated $150 million annually in compliance costs.

For more information on the proposed transitional rules for new housing, visit
www.gov.bc.ca/hst.

(SOURCE: News Release/BC Ministry of Finance)