HST and Real Estate Purchases
Amid considerable controversy, the HST took effect in BC on July 1, 2010. The following outlines the key features of the application of the new HST regime on the sale of “resale” (i.e. existing homes) and “new” homes.
Sale of Resale Homes
The HST, similar to the GST, does not apply to the sale of a resale home. The HST does apply to REALTOR® fees or commissions and related closing costs, appraisals and inspections.
Sale of New Homes
The HST does apply to the sale of new residential construction, substantially renovated homes and building lots. This will not necessarily result in a net increase of 7% to the cost to the purchaser as an HST rebate is available on the purchase of “primary” residences.
The graph below shows the net impact of the HST in terms of the total cost to the purchaser. On the face of it, the figures suggest that the HST will increase the cost to the purchaser of about 2% up to $525,000 and gradually increase to about 4% at the $1,000,000 mark.
On the other hand, the Canadian Home Builders’ Association of BC (CHBABC) suggests that because the old PST was embedded in the cost of a new home it added about 2% to the the asking price. The CHBABC reasons that the net effect of the HST is somewhat less than the figures in Table 1. For more details see http://www.chbabc.org/content.php?id=498
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Please Note: Buyers and Sellers should obtain legal advice from their lawyer regarding the application of the HST to a real estate transaction
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