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| Friday, March 12, 2010 effective July 1, 2010, BC will adopt a Harmonized Sales Tax (HST), combining the 7% Provincial Saleby Leela Lacterman and Sarah Penikett on Fri, Mar, 12, 2010 08:10 PM What is the Harmonized Sales Tax (HST)?
On July 23, 2009, Premier Gordon Campbell and Finance Minister Colin Hansen announced that, effective July 1, 2010, BC will adopt a Harmonized Sales Tax (HST), combining the 7% Provincial Sales Tax with the 5% federal Goods and Services Tax for a single sales tax rate of 12%. The federal government will provide BC with $1.6 billion in transitional funding.
For consumers, goods and services (with some exceptions) will be subject to the HST in the same manner as they are currently subject to GST. Therefore, all items on which GST is not payable, such as basic groceries, prescription drugs and medical devices, would also not be subject to the HST. (Source: BC Government website, www.gov.bc.ca/hst/faq.html, accessed September 28, 2009)
British Columbia Real Estate Association
How does HST effect real estate specifically?
1. HST will affect the purchase of NEW homes. Currently there is only a 5% federal tax for the purchases of new contruction. This tax will be replaced by th 12% HST as of July 2010.
2. The government has announced that any new properties costing up to $525,000 will be exempt from the new tax. The original government proposed amount was $400,000. This represents a 30% increase in the exemption amount.
3. For new construction costing more than $525,000, the government has announced a provincial tax rebate program for the HST paid on a new home purchases. This amount has increased to $26,250 from the original $20,000 rebate announced when the proposed HST was originally released to the media. Again, this represents a 30% increase.
4. HST will be applicable to the costs and fees associated with a Real Estate transaction. This will include fees regarding any home inspections, legal work, comissions and any other closing costs that are part of a Real Estate purchase.
5. HST will also be applicable to many monthly costs associated with running a household. These costs include monthly strata fees, cable, internet, gas and electricity just to name a few.
For more information on how HST effects real estate, please contact us directly. |
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