HST QUICK LINKS:
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 than is currently embedded as PST.
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 November 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.
“Benefits” for Home Buyers
Currently, new homes in B.C. are subject to the GST, and also carry an estimated two per cent embedded tax as a result of the PST paid on most construction materials.
Under the proposed Harmonized Sales Tax, new homes will be subject to the HST but the embedded PST will be eliminated because builders will be able to recover the tax paid on materials through input tax credits.
Used homes will not be subject to the HST. An essential part of the BC HST will be a tax rebate for new homes.
- A rebate of up to $26,250 will ensure that purchasers of new homes up to $525,000 do not pay more tax due to harmonization than is currently embedded in the price of a new home.
- New homes above $525,000 will be eligible for a $26,250 rebate.
- This enhanced rebate represents a 30 per cent increase in the threshold and maximum rebate available.
- New home sales will be subject to the HST.
- Sales of used homes will not be subject to HST.
The Province is also proposing an enhanced rebate for new rental housing, similar to the enhanced rebate for new homes, to support the construction or substantial renovation of affordable rental housing in B.C.
– The new rental housing rebate would ensure that, on average, new rental housing up to $525,000 would not be subject to any more tax due to harmonization than is currently embedded as PST in the price of new rental housing.
We will also provide a provincially-administered point-ofsale rebate for residential energy, ensuring the HST will not increase consumers’ costs for oil, electricity, natural gas or propane used to heat or power homes.
ENHANCED NEW HOUSING REBATES
B.C. is proposing to provide an enhancement to the new housing rebate that was announced on July 23, 2009.1 The new housing rebate would be enhanced so that new homes purchased as a primary residence would receive a rebate of 71.43 per cent of the provincial component of the HST paid, up to a maximum of $26,250. This enhanced rebate represents a 30 per cent increase in the maximum rebate available.
While sales of new homes in B.C. are not directly subject to the PST, building materials used in the construction of homes are subject to the seven per cent PST. The amount of PST, on average, embedded in the selling price of a new home is estimated to be equal to two per cent. As a result of the decision to enhance this proposed rebate, purchasers of homes priced up to $525,000 would pay no more tax, on average, than under the current PST.
New housing rebates would be available for the provincial component of the HST paid for all types of housing eligible for GST new housing rebates. Qualifying housing2 would generally include the following types of newly constructed and substantially renovated homes used as a primary place of residence by an individual or qualifying relation of the individual:
- purchase of new houses together with land
- purchase of new houses together with leased land
- purchase of new mobile homes and floating homes
- houses acquired through the purchase of qualifying shares in a housing co-op and
- houses constructed or substantially renovated by the owner who is an individual (i.e., owner-built homes).
The new housing rebates would be subject to the same eligibility conditions as new housing rebates under the GST. However, as previously announced, the rebate rates (or factors) and maximum rebate amounts for the B.C. new housing rebates would be different to address the particular circumstances of the housing industry in B.C.
The new housing rebates would be federally administered in a manner similar to the GST rebates for new housing. Individuals would be able to file an application for the rebate directly with the Canada Revenue Agency (CRA). However, in the case of homes sold by the builder, similar to the GST new housing rebates, the builder would have the option of paying or crediting the new housing rebate to the purchaser at the time of purchase.
New housing rebate – for purchases of new houses together with land
A new housing rebate would be provided for purchases of new single-unit houses or duplexes together with land from a builder where the home is purchased by an individual for use as a primary place of residence of the individual or a relation of the individual.3
The new housing rebate would be 71.43 per cent of the provincial component of the HST paid for qualifying housing, up to a maximum amount of $26,250. There would be no phase out of this rebate, such that homes priced above $525,000 would qualify for the maximum rebate amount of $26,250.
New housing rebate – for purchases of new houses together with leased land
A new housing rebate would be provided for purchases of new single-unit houses or duplexes together with leased land from a builder where the home is purchased by an individual for use as a primary place of residence of the individual or a relation of the individual.
In these circumstances, it is the builder who would be required to self-assess and pay the HST under the self-supply rules. As a result, the HST generally would be embedded in the price paid by the purchaser for the new house together with the leased land.
The new housing rebate available to the purchaser would be 4.47 per cent of the price attributable to the building, up to a maximum rebate of $26,250. There would be no phase out of this rebate, such that homes priced above $588,000 would qualify for the maximum rebate amount of $26,250.
New housing rebate – for purchases of new mobile homes and floating homes
A new housing rebate would be provided for purchases of new mobile homes and floating homes where the home is purchased by an individual for use as a primary place of residence of the individual or a relation of the individual. For purposes of the GST and the HST, a mobile home includes certain modular homes.
The new housing rebate would be 71.43 per cent of the provincial component of the HST paid for qualifying mobile and floating homes, up to a maximum rebate amount of $26,250. There would be no phase out of this rebate, such that mobile and floating homes priced above $525,000 would qualify for the maximum rebate amount of $26,250.
Where a mobile home is purchased and placed on a site in a residential trailer park, or a floating home is purchased and docked at a moorage facility, this rebate would only apply to the provincial component of the HST paid on the purchase of the mobile home or floating home, as the case may be, not the HST that may be paid on the site or the moorage.
Where the mobile home and the land on which the mobile home is placed are purchased together, the new housing rebate would be based on the provincial component of the HST paid on the purchase of the mobile home together with the land – see the “New housing rebate – for purchases of new houses together with land” section above.
Where the mobile home is purchased together with leased land (other than a site in a residential trailer park), the new housing rebate for the purchase of houses on leased land would apply — see the “New housing rebate – for purchases of new houses together with leased land” section above.
Where the mobile home is purchased and placed on land purchased from a separate supplier, the individual purchaser would have the choice of claiming the new housing rebate for owner-built homes — see the “New housing rebate – for owner-built housing” section below.
New housing rebate – for owner-built homes
A new housing rebate would be provided for owner-built homes where an individual constructs or substantially renovates his or her primary place of residence or that of a relation of the individual or who hires another person to do such new construction or substantial renovation.
The maximum rebate for owner-built homes would depend on whether the individual paid the provincial component of the HST on the land.
Provincial component of HST paid on land
Where the provincial component of the HST was paid on the land, an individual would be entitled to a new housing rebate of 71.43 per cent of the provincial component of the HST paid on qualifying construction expenses (including land), up to a maximum rebate amount of $26,250. There would be no phase out of this rebate, such that owner-built homes with qualifying construction expenses over $525,000 would qualify for the maximum rebate amount of $26,250.
No provincial component of HST paid on land
Where the provincial component of the HST was not paid on the land, an individual would be entitled to a new housing rebate of 71.43 per cent of the provincial component of the HST paid on qualifying construction expenses (not including land), up to a maximum rebate amount of $17,588 (i.e., 67 per cent of $26,250).
