HST transition rules for new homes announced

(February 17, 2012 )

VICTORIA -- British Columbia will return to the PST on April 1, 2013, Finance Minister Kevin Falcon announced Friday as he unveiled the rules for how a transition from the HST will apply to the sale of new homes.

"We have now landed on April 1, 2013 as the date where we can do the transition responsibly," Falcon told reporters in Victoria.

Falcon also announced that as of April 1 of this year, the government will significantly increase the threshold for its HST rebate program.

The move means new homes costing up to $850,000 will now be subject to only a two-per-cent HST, as opposed to a seven percent provincial tax.

Currently, only homes up to $525,000 qualify for the rebate.

Falcon said his government is also introducing the rebate for new second and recreational homes sold outside the Capital and Greater Vancouver Regional Districts, costing up to $850,000.

Currently, there is no HST rebate for new second and recreational homes of any price.

Falcon said he chose the $850,000 level because that captures about 90 per cent of the market, adding people who pay more can clearly afford to absorb a bit of a hit.

"I just happen to believe that if you're able to afford a home above that level you are at a different level than the rest of us," he said.

Falcon also announced Friday the government is introducing a transition tax for homes built while the HST is in place, but sold after the PST is reintroduced.

That two-per-cent tax will take effect April 1, 2013 and will apply to new homes at all price points. He said the measure is meant to ensure a home bought before April 2013 and after are treated equally.

The two per cent number is significant, Falcon said, because that is the rough amount of tax that is embedded into a new home constructed when the PST is in place.

That is because under PST, tax is charged on building materials, whereas under HST materials are not taxed at all.

Falcon said all the moves are meant to provide certainty for both home builders and buyers, saying the government will not lose or gain extra revenues as a result of the measures announced today.

SOURCE: © Copyright (c) The Victoria Times Colonist