On July 1, 2010, British Columbians will begin paying the Harmonized Sales Tax (HST) on many goods and services. The HST will add the existing 7% BC Provincial tax to any product and service that has the existing 5% GST applied to it, including new housing. If you are buying or selling a home the following points will identify what the HST affects.

How HST affects Home Purchase

1. Newly constructed and significantly renovated homes (more than 90%) will be subject to the entire 12% HST. Currently, these are only subject to the 5% GST charge.


2. Pre-owned homes will not be affected by the HST


3. The HST will increase the cost of buying and selling old and new property, as it will be applied to any service currently subject to the GST, including Realtor® fees, appraisals, legal services and so forth


4. New homes priced $525,000 or less will be discounted 71.43% of the provincial portion, up to $26,250. New homes exceeding $525,000 are eligible for flat rebate of $26,250

Qualifying for the New Housing Rebate

According to the REBGV, eligibility for the New Housing Rebate may be granted if the buyer purchases, as their primary residence:

• a new home together with land;
• a new home together with leased land;
• a new mobile home or float home;
• a new home purchased through shares in a housing cooperative; or
• a home constructed or substantially renovated (more than 90%) by the owner-builder.

Presales and the HST Timeline

If you bought a presale property, that property may or may not be subject to the HST depending on when the agreement was made, and when you will take possession.

Presales and the HST Timeline	Take ownership or possession before July 1, 2010	Take ownership or possession after July 1, 2010
Bought On or before Nov 18, 2010	Will not pay HST Not eligible for New Housing Rebate Pay GST	Will pay HST May be eligible for New Housing Rebate
Bought After Nov 18, 2010	Will not pay HST Not eligible for New Housing Rebate Pay GST	Will pay HST May be eligible for New Housing Rebate

Vacant land

If you are buying vacant land, whether you pay the HST will depend on how the land was used before you bought it, whether it was used for business purposes. Here are a few selected examples.

• If you are buying a lot from a private individual and not a developer, and the land has never been used for business, you will be exempt from paying the HST on that property
• If the lot was subdivided into three or more lots or is purchased from a developer, you will pay the HST you take possession after July 1, regardless of the date of title transfer. If you take possession before July 1, you will only pay the GST
• If you are building a home and 90% is completed after July 1, 2010, you will pay HST but may be eligible for the New Housing Rebate

New Rental Housing Rebate

If you bought a new home, are planning to build or make significant renovations in order to rent, you may be eligible for a New Rental Housing Rebate of up to $26,250 for units priced up to $525,000. To be eligible, the unit must be occupied by the owner or renters for one year or longer.

Costs that apply to new or resale homes

The HST will apply to a variety of goods and services associated with buying a home, separate from the actual price of the property. These include renovations, energy efficient appliances and fixtures, appraisals and inspections and Realtor® commissions.

Transitional rules for Realtor® Fees

Realtor® services carried out July 1 or later are subject to the HST, unless 90% were carried out before that date. If a portion of Realtor® services (more than 10%) were performed after July 1st, then that portion is subject to HST. For example, if a Realtor® were to provide services from June 1 to August 1st 2010, they would charge GST on 50% and HST on the other half.

HST not PTT

The Property Transfer Tax is different from the HST. It is a provincial tax on property transfers charged at a rate of 1% up to $200,000 and 2% on the rest. First-time home buyers may qualify for an exemption from the tax.

To Recap

The HST will affect mainly the purchase of new homes and homes with significant renovations

The tax will affect associated costs of buying any home, old or new. These will include Realtor® commissions, closing fees and moving costs

Buyers may be eligible for a rebate of up to $26,250 on new homes or new rental homes priced up to $525,000

This article reflects the latest information provided by the Real Estate Board of Greater Vancouver and the British Columbia Government. To ensure that you understand all eventualities, we recommend that you seek the advice of a licensed Realtor®.