The government today Feb 17 announced the HST/PST transitional rules on new homes.

As the province transitions back to the PST, which will replace the HST effective April 1, 2013, measures to ease the HST burden on new home buyers include:

• The BC New Housing Rebate threshold will increase to $850,000 from $525,000, so that more than 90% of newly built homes will now be eligible for a provincial HST rebate effective April 1, 2012.
• The maximum rebate will increase to $42,500 from $26,250 effective April 1, 2012.
• Buyers 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.
• For newly built homes where construction begins before April 1, 2013, but ownership and possession occur after, purchasers will not pay the 7% provincial portion of the HST. Instead, purchasers will pay a temporary, transitional provincial tax of 2% on the full house price.

HST/PST transition rules will help ensure that whenever purchasers buy a new home they will all pay a consistent and equitable amount of tax, whether the home is built:

• entirely under the HST;
• entirely under the PST; or
• partly under HST and partly under the PST.

The temporary housing transition measures will be in place until March 31, 2015. The tax only applies to homes where construction begins before the transition date and ownership and possession occur after.

REBGV successfully advocated for the following:

• An increase in the threshold value of homes to be covered by the rebate;
• An increase in the rebate amount;
• An announcement of the transition rules for new homes as early as possible.

Note: This information is current to today, February 21, 2012
and has been verified with the Canada Revenue Agency, HST
Branch. However, we have been advised that the information
could change depending on HST rulings to come.
Enhanced New Housing Rebate
Effective April 1, 2012, your clients may be eligible for a
provincial enhanced New Housing Rebate if they buy, as their
primary residence, priced up to $850,000:
• a new home together with land;
• a new home together with leased land;
• a new mobile home or float home;
• a new home bought through shares in a housing cooperative;
or
• a new home constructed or substantially renovated (more than 90%) by the owner builder.
Your clients may also be eligible for a provincial New Housing Rebate if they buy a secondary vacation or recreational homes outside the Greater Vancouver and Capital Regional Districts priced up to $850,000.
Buyers of new homes will be eligible for a rebate of 71.43% of the provincial portion of the HST paid on the new home up to a maximum rebate of $42,500. Homes priced at more than $850,000 will be eligible for a flat rebate of $42,500.
HST is payable GST/HST generally becomes payable on the earlier of the day on which ownership is transferred to the recipient and the day on which possession of the property is transferred to the recipient.
Presales
Agreements signed before April 1, 2012, with possession before April 1, 2012 (Current to April 1,2012)
If your clients buy a presale residential property and they have an agreement dated on or before April 1, 2012 and they take ownership or possession before on or before April 1, 2012, they will pay the 12% HST and be eligible for a rebate of up to
$26,250 on homes priced to a maximum of $525,000. Homes priced at more than $525,000 are eligible for a flat rebate of $26,250.
Agreements signed before April 1, 2012, with possession before April 1, 2013
If your clients buy a presale residential property and they have an agreement dated on or before April 1, 2012 and they take ownership or possession on or before April 1, 2013, they will pay the 12% HST and be eligible for a rebate of up to $42,500
on homes priced to a maximum of $850,000. Homes priced are more than $850,000 are eligible for a flat rebate of $42,500.
Agreements signed before April 1, 2012, with
possession after April 1, 2013
If your clients buy a presale residential property and they have an agreement dated on or before April 1, 2012 and they take ownership or possession before on or after April 1, 2013, they will not pay the 7% provincial portion of the HST. Instead,
buyers will be a temporary transitional provincial tax of 2% on the full house price. This 2% reflects an embedded PST builders pay on materials.
Agreements signed after on or after April 1, 2012 and before April 1, 2013, with possession before April 1, 2013 (This is the transition period) If your client buys a presale residential property and they have an agreement dated on or after April 1, 2012 and before April 1, 2013, and they take ownership and possession before April
1, 2013, they will pay the 12% HST and be eligible for a rebate of up to $42,500 on homes priced to a maximum of $850,000. Homes priced are more than $850,000 are eligible for a flat rebate of $42,500.
Agreements signed on or after April 1, 2012, with
possession after April 1, 2013
If your client buys a residential property and they have an agreement dated on or after April 1, 2012 but the construction of the home commenced before April 1, 2013, and they take ownership and possession after April 1, 2013, they will not
pay the 7% provincial portion of the HST. Instead, buyers will be a temporary transitional provincial tax of 2% on the full house price. This 2% reflects an embedded PST builders pay on materials.
Agreements signed on or after April 1, 2013, with possession after April 1, 2013
The GST is applicable. The HST will generally cease to apply to sales of real property (including residential real property) if ownership and possession of the property transfer on or after April 1, 2013. This will be the case for sales of new housing, The province will transition back to the Provincial Sales Tax (PST), which will replace the Harmonized Sales Tax (HST), on April 1, 2013. Until then, the province has announced transitional rules for new homes which take effect April 1, 2012.
February 21, 2012
Continued overleaf
irrespective of whether the agreement of purchase and sale was entered into before April 1, 2013 or whether construction of the new housing began before April 1, 2013.
The PST will not apply to sales of real property. However, the PST will apply to certain types of housing which, at the time of purchase are tangible personal property (a mobile home purchased without land) and where possession transfers on or after April 1, 2013. The PST will also apply to construction inputs that are used to improve real property on or after April 1, 2013.
Agreements signed on or before November 18, 2009, or construction began before July 1, 2010, with possession on or after April 1, 2013 (Doublestraddling, grandparented)
Special transitional rules apply if your client has bought a presale residential property and they have an agreement dated on or before November 18, 2009, or construction began before July 1, 2010 (the HST start date in BC) and for which ownership and
possession transfer on or after April 1, 2013 (the HST end date in BC), this is known as a double-straddling home sale. In this situation, your client will pay a 2% transition tax.
Agreements signed after November 18, 2009, or construction began before July 1, 2010, with possession on or after April 1, 2013 (Doublestraddling,
non-grandparented)
Special transitional rules apply if your client has bought a presale residential property and they have an agreement dated after November 18, 2009, and construction began before July 1, 2010 (the HST start date in BC) and for which ownership
and possession transfer on or after April 1, 2013 (the HST end date in BC), this is known as a double-straddling home sale. In this situation, your client will pay a 2% transition tax. In this situation, your client will pay a 2% transition tax. However the
2% tax will not apply where construction has been substantially completed before July 1, 2010 and the PST Transitional New Housing Rebate has not been claimed as of February 17, 2012