Its not often that consumers get a break on new purchases. The Harmonized Sales Tax (HST) New Home Rebate is a BC government initiative which aims to compensate new home buyers for the added taxes associated with the implementation of the HST. The rebate is available for “newly constructed” homes or “substantially renovated” homes purchased as a primary place of residence. A “substantial renovation” is one where the interior of a building is essentially gutted and rebuilt before being sold. The rebate is applicable (in whole or in part) to all new homes purchased after the July 1st, 2010.
The new housing rebate is equal to 71.43% of the provincial component of the HST (7%), paid up to a maximum amount of $26,250. There is no phase out based on value – so homes priced above the $525,000 threshold qualify for the maximum rebate amount of $26,250. For example, in the purchase of a newly constructed $700,000 home, the provincial proportion of the HST would amount to $49,000 but the purchaser would qualify for the $26,250 rebate resulting in net HST of $22,750.
In many cases, the New Home Rebate can be assigned directly to the builder, resulting in the purchaser only having to pay the ‘net’ HST on closing.
The rebate does not apply to re-sale residential houses as they are not subject to the HST but is available for the construction or the substantial renovation of a person’s primary place of residence. In such cases, the HST paid on qualifying construction expenses (including land) are used to calculate the rebate which is available as a reimbursement. The rebate amount is again equal to 71.43% of the provincial component of the HST (7%), paid up to a maximum amount of $26,250.
For more information on the HST Rebate or on buying or selling a home, please contact Curtis Darmohray at (250) 869-1125 or at firstname.lastname@example.org.