HST/PST News for Home Buyers

The province will transition back to the Provincial Sales Tax (PST), which replaces the Harmonized Sales Tax (HST) on April 1, 2013. Until then, the province has transitional rules for new homes which took effect on April 1, 2012.

Note:

Enhanced HST New Housing Rebate

Effective April 1, 2012, your clients may be eligible for a provincial enhanced New Housing Rebate if they buy, as their primary residence, priced up to $850,000:

Presales and Completed New Homes for

90%) by the owner builder.

Fiance administered rebate) if they buy or build a secondary vacation Regional Districts.

the provincial portion of the HST paid on the new home up to a

The GST/HST generally becomes payable on the earlier of the day on which ownership is transferred to the recipient and the day on is the day the tax is payable).

GST New Housing Rebate

Your client may be elegible for a GST rebate if they buy, as their

the GST is applicable on new homes, the GST rebate will continue

2% BC Transition Tax

homes if ownership and possession take place on or after April ceseases to apply if ownership and possession are on or after April 1, embedded 2%, but they cannot under the GST.

Agreements signed before April 1, 2012, with

The 2% BC Transition Tax does not apply to:

land.

commercial units.

Sale under the HST

possession before April 1, 2012

If your client bought a presale residential property and they had an agreement dated before April 1, 2012 and they took ownership or possession before April 1, 2012, they would have paid the 12% HST maximum of $525,000. Homes priced at more than $525,000 were

Agreements signed before April 1, 2012, with

possession on or after April 1, 2012, but before

April 1, 2013

If your client buys a presale residential property and they have an agreement dated before April 1, 2012 and they take ownership or on homes priced to a maximum of $850,000. Homes priced at more

Agreements signed on or after April 1, 2012 and

before April 1, 2013, with possession before

April 1, 2013

If your client buys a presale residential property and they have an on homes priced to a maximum of $850,000. Homes priced at more

Presales and Completed New Homes for Sale under the GST
The 12% HST will generally cease to apply to sales of real property the property transfer on or after GST will apply to the sale of new home sales.

will apply to certain types of housing which, at the time of purchase without land) and where possession transfers on or after April 1,

Agreements signed before April 1, 2012, with

possession on or after April 1, 2013, but before

April 1, 2015

If your client buys a presale residential property and they have an agreement dated before April 1, 2012 and they take ownership or Instead, buyers will pay the 5% GST. They will also have to pay the substantial renovation of the new home is 10% or more completed If ownership and possession is on or after April 1, 2015 then the 2% tax is not applicable.

Agreements signed on or after April 1, 2012, with

possession on or after April 1, 2013, but before

April 1, 2015

If your client buys a presale residential property and they have an agreement dated on or after April 1, 2012, and they take ownership HST. Instead, buyers will pay the 5% GST. They will also have construction or substantial renovation of the new home is 10% or If ownership and possession is on or after April 1, 2015 then the 2% tax is not applicable. This 2%

Agreements signed on or after April 1, 2013, with

possession on or after April 1, 2013, but before

April 1, 2015

If your client buys a presale or completed new residential property will have to pay the 5% GST. They will also have to pay the 2% substantial renovation of the new home is 10% or more completed as If ownership and possession is on or after April 1, 2015 then the 2% tax is not applicable.

New Addendums Required for the Contract of Purchase and Sale for New Housing the builder) that enters into a written agreement of purchase and

the purchaser. In some cases the information must be provided in information must be provided in a written addendum to the contract.

new housing are mandatory starting December 1, 2012. This is a

requirement of the and the New Housing Transition Tax and Rebate Regulation.

Forms® for use by REALTORS® who are acting for a client or clients in new housing transactions.

To determine which of the four new addendums is applicable to a particular new housing transaction, you must examine when the transaction was entered into and whether or not the seller of the property is a “foreign supplier.” The four addendums are organized as follows:

1. Addendum for a Contract of Purchase and Sale that was signed on or after February 17, 2012
and before December 1, 2012, with ownership or possession after December 31, 2012, and the seller is not a “foreign supplier”.

2. Addendum for a Contract of Purchase and Sale that was signed on or after February 17, 2012
and before December 1, 2012, with ownership or possession after December 31, 2012, and the seller is a “foreign supplier”.

3. Addendum for a Contract of Purchase and Sale that was signed on or after December 1, 2012, and before April 1, 2015, with ownership and possession before April 1, 2015, and the seller is a not a “foreign supplier”.

4. Addendum for a Contract of Purchase and Sale that was signed on or after December 1, 2012, and before April 1, 2015, with ownership and possession before April 1, 2015, and the seller is a “foreign supplier”.

tax on the transaction, and therefore the buyer is required to remit Transition Tax) directly to the government.

1. and 2. before December 1, 2012, with ownership or possession transfers applicable new addendum to the buyer on or before January 2, 2013. The seller must:

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•  provide a copy of the applicable new addendum to the buyer in at least one of the following ways:

  •  by giving a copy of the new addendum in person to the

  •  by sending a copy of the new addendum by courier

    or registered mail to the buyer’s address of record for

  •  by sending a copy of the new addendum to the buyer’s

by sending a copy of the new addendum by any other

method including, for example, electronic mail, provided from the buyer or the real estate licensee acting for the buyer.

A vendor or seller of real estate who do not comply with these

Grandparented Agreements

Agreements signed on or before
November 18, 2009, or construction which began before July 1, 2010, with possession on or after

April 1, 2013 (Double-straddling, grandparented)

Special transitional rules apply if your client has bought a presale residential property and they have an agreement dated on or before known as a double-straddling home sale. In this situation, your client

Agreements signed after November 18, 2009, or construction which began before July 1, 2010, with possession on or after April 1, 2013 (Double-

straddling, non-grandparented)

Special transitional rules apply if your client has bought a presale residential property and they have an agreement dated after November 18, 2009, and construction began before July 1, 2010 known as a double-straddling home sale. In this situation, your client the 2% tax will not apply where construction was substantially

New Recreational Property

All the same rules apply to new recreational property that apply
to other new residential property. Your clients may be eligible for
a provincial grant if they buy or build a secondary vacation or Districts.

Vacant Land

HST paid on land

For owner-built homes where the HST was paid on the land, the owner may be eligible for a rebate on qualifying construction be no phase-out of this rebate, such that owner-built homes with qualifying construction expenses over $850,000 will qualify for the

No HST paid on land

Where the HST was not paid on the land, the owner will be entitled to a new housing rebate on qualifying construction expenses only

When is tax applied to vacant land?

following circumstances:

•  If the land is purchased from a developer.

•  If the land was used for business purposes at any time in the

  past, even if the land was purchased from an individual.

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  more), even if the land was purchased from an individual.

  2% BC Transition Tax and Vacant Land

  not apply to vacant land. This 2%

  Enhanced New Rental Housing Rebate

  There is an enhanced provincial New Rental Housing Rebate. If your clients construct or substantially renovate a residential property to units priced above $850,000.

  primary residence by the owner for at least one year. Eligible units include:

  where the land is leased or is a housing cooperative.
  If your client buys a new apartment which is not their principal

  residence and they don’t rent it, for example, if strata bylaws prohibit rentals, or your clients buy a new apartment to use on weekends, the unit is not eligible for the New Rental Housing Rebate.

  so long as they rent all of the units, they will be eligible for a New Rental Housing Rebate for each unit up to a maximum rebate of

  If your client builds or substantially renovates rental property, they will be required to self-assess and pay the HST on or after April 1,

  Commissions and Fees

  the 12% HST. If a commission or fee is payable on or after April 1,

  When does a commission become payable?

  payable on the earlier of the following:

For More Information

•  Visit: www.pstinbc.ca

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•   information requirements:

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• www.bcrea.bc.ca/government-relations/hst-pst-resources

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  Government Relations at: hpermut@rebgv.org