New Housing Transitional Rules
On February 17th, 2012 the Government announced the transitional rules for returning to the PST. Below you will find information as well as the detailed tax information notice on these rules.
The housing transition rules help ensure when people buy a newly constructed home under the PST, whether built entirely under the HST, entirely under the PST, or partly under HST and partly under the PST, they will all pay a consistent and equitable amount of tax. The transition rules provide certainty for new-home construction and sales, particularly during the transition period.
- B.C.’s portion of the HST will no longer apply to newly built homes where construction begins on or after April 1, 2013. Builders will once again pay seven per cent PST on their building materials. On average, about two per cent of the home’s final price will again be embedded PST.
- The temporary housing transition measures will be in place for two years, until March 31, 2015. The tax only applies to homes where construction begins before the transition date and ownership and possession occur after.
- The temporary housing transition tax and the temporary housing transition rebates will be administered by the Canada Revenue Agency on behalf of B.C. The Province is administering the grant for new secondary vacation and recreational homes.
For newly built homes where construction begins before April 1, 2013, but ownership and possession occur after, purchasers will not pay the seven per cent provincial portion of the HST. Instead, purchasers will pay a temporary, transitional provincial tax of two per cent on the full house price. This ensures equitable treatment among purchasers and will help mitigate distortive market behaviour. Builders will receive temporary housing transition rebates to offset PST on materials to help prevent double-taxation on homebuyers.
- Average amount of embedded sales tax in newly built homes under PST: two per cent.
- Tax paid by purchasers on an $850,000-newly built home after HST rebate: two per cent.
- Tax rate on a newly built home during transition: two per cent.
The B.C. new housing rebate threshold will be increased to $850,000, meaning more than 90 per cent of newly built homes will now be eligible for a provincial HST rebate of up to $42,500.
It is important to note that the HST does not apply to resale housing.
Raising the B.C. HST rebate threshold to $850,000 is expected to save purchasers about $60 million in 2012-13.
The maximum value rises to $42,500 from $26,250, a 60 per cent increase.
To help support workers and communities in B.C. that depend on residential recreational development, purchasers of new secondary vacation or recreational homes outside the Greater Vancouver and Capital regional districts priced up to $850,000 will now be eligible to claim a provincial grant of up to $42,500 effective April 1, 2012.
Tax Information Notices:
Grant for New Secondary or Recreational Residences - Ministry of Finance
Application for New Housing Rebates - CRA
Application for First-Time Home Buyers' Bonus
More Information
If you have questions regarding eligibility requirements for the enhanced new housing rebates or new rental housing rebates or about the application of the B.C. transition tax or B.C. transition rebate, please call the Canada Revenue Agency at 1‐800‐959‐8287 (English) and 1‐800‐959‐8296 (French) or go to:
http://www.fin.gc.ca/n12/12-017-eng.asp (English)
http://www.fin.gc.ca/n12/12-017-fra.asp (French)