I was so worried about understanding the new HST so I did my research, and guess what - It is really very simple.
In order to understand how the BC HST on new housing works you have to separate it into its' two parts.
First, we all know how the GST worked. It still works exactly the same way. Purchase Price x 5%. If the new homeowner is entitled to the GST rebate it still applies exactly as it did before. So if a townhouse for example is under $350,000.00 the homeowner is entitled to a rebate of 36% of the GST paid. The formula for determining the GST rebate for homes priced between $350,000.00 and $450,000.00 remains the same and of course over $450,000.00 there is no rebate for GST so the full 5% is payable. (the "Federal New Homeowner Rebate")
The second part is a new tax of 7% - the Provincial tax - but there is a rebate available on this tax as well for the qualified homebuyer. So take the purchase price x 7% x 71.43% to a maximum of $26,250.00 = the rebate amount. There is no minimum or maximum purchase price for this rebate just the maximum rebate amount. (the "Provincial New Homeowner Rebate")
There are some dates to remember. Purchases will only be subject to GST if the original Contract was signed before the grandparenting date of November 18, 2009. This will only be an issue if you are selling or purchasing a Contract signed before then (an assignment).
For all other contracts signed after November 18, 2009 and and completing after July 1, 2010 HST must be paid. Any house which was at least 10% complete on June 30th, 2010 is considered to have PST embedded in the Purchase Price and therefore the Buyer is there entitled to a Transitional Rebate. All buyers, regardless of why they are purchasing the home are entitled to the Transitional Rebate. This rebate amount should be provided by the Seller. Roughly the transitional rebate applies to new housing (not condominiums or townhouses) at a rate of $60. per square meter of finished floor space or at the rate of 2% of the housing portion of the purchase price (whichever is greater) X the degree of completion as at July 1, 2010 as follows:
between 10 and 25 per cent complete - 25%
between 25 and 50 per cent complete - 50%
between 50 and 75 per cent complete - 75%
between 75 and 90 per cent complete - 90% and
over 90% - 100%
This buyer is entitled to the rebate and it may be claimed by the individual or by the builder and credited to the Buyer on completion.
If your purchase price includes net HST and the property qualifies for a Transitional Rebate a clause should be added to the Contract to ensure that all of the applicable Federal New Homeowner Rebate, Provincial New Homeowner Rebate and the Transitional Rebate are assigned to the Seller.
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