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vancouver-real-estate-direct.com
This is a BC HST Price Chart that outlines the new home HST Tax Increase and price difference for new British Columbia and Vancouver homes. The numbers tell the story. The BC HST Price Chart indicates that a typical new home will end up costing anywhere between 2% more (for $100,000 home) to more than 7% more (for $2,000,000 home) in the province come July 1st, 2010. The BC HST Price Chart should be used as a reference guide for any new first time homebuyer looking for the BC HST price difference between the old system and new system.
| Story Highlights |
| • |
Contrary to what the BC Government has told the public, the new home BC HST tax increase will affect all new homebuyers. |
| • |
The BC HST Price Chart indicates that the total cost of a new home in the province will cost anywhere from 2% to over 7% more than compared to the current 5% GST only system. |
| • |
The BC HST price difference and tax increase on new homes will have a profound influence on the Vancouver first time homebuyers market. The extra 12% tax burden won’t be financed by the major banks, and therefore, the BC HST tax increase will only force many first time homebuyers out of the new housing market. |
| • |
With decreased demand from the BC first time homebuyers market because of the new home HST tax increase and significant price difference as seen in the BC HST Price Chart, there will be a slow down in the new housing construction industry. |
| • |
ANNOUNCEMENT on November 19, 2009: BC Government will raise the threshold for its maximum HST rebate on new homes to $525,000 from $400,000, effectively increasing the rebate by 30 per cent. For homes priced under $525,000, the rebate will ensure there is no additional tax burden from the HST. Purchasers of homes over the new threshold will pay the seven-per-cent HST and be eligible for a maximum rebate of $26,250. |
Price of Eligible
New Home
|
|
|
OLD SYSTEM (5% GST)
|
|
NEW SYSTEM (12% HST) |
|
|
|
GST (5%)
|
GST Portion
|
Other Closing Costs
|
Total Purchase Price
|
|
HST (12%)
|
GST Portion
|
BC Portion
|
Other Closing Costs
|
Total Purchase Price
|
|
|
$100,000
|
$1,000
|
|
$5,000
|
$1,800
|
$2,000
|
$106,200
|
|
$12,000
|
$1,800
|
$5,000
|
$2,140
|
$108,340
|
|
$2,140
|
|
$150,000
|
$1,500
|
|
$7,500
|
$2,700
|
$2,000
|
$158,300
|
|
$18,000
|
$2,700
|
$7,500
|
$2,140
|
$161,440
|
|
$3,140
|
|
$200,000
|
$2,000
|
|
$10,000
|
$3,600
|
$2,000
|
$210,400
|
|
$24,000
|
$3,600
|
$10,000
|
$2,140
|
$214,540
|
|
$4,140
|
|
$250,000
|
$3,000
|
|
$12,500
|
$4,500
|
$2,000
|
$263,000
|
|
$30,000
|
$4,500
|
$12,500
|
$2,140
|
$268,140
|
|
$5,140
|
|
$300,000
|
$4,000
|
|
$15,000
|
$5,400
|
$2,000
|
$315,600
|
|
$36,000
|
$5,400
|
$15,000
|
$2,140
|
$321,740
|
|
$6,140
|
|
$350,000
|
$5,000
|
|
$17,500
|
$6,300
|
$2,000
|
$368,200
|
|
$42,000
|
$6,300
|
$17,500
|
$2,140
|
$375,340
|
|
$7,140
|
|
$400,000
|
$6,000
|
|
$20,000
|
$3,150
|
$2,000
|
$424,850
|
|
$48,000
|
$3,150
|
$20,000
|
$2,140
|
$432,990
|
|
$8,140
|
|
$450,000
|
$7,000
|
|
$22,500
|
$0
|
$2,000
|
$481,500
|
|
$54,000
|
$0
|
$20,000
|
$2,140
|
$493,140
|
|
$11,640
|
|
$500,000
|
$8,000
|
|
$25,000
|
$0
|
$2,000
|
$535,000
|
|
$60,000
|
$0
|
$20,000
|
$2,140
|
$550,140
|
|
$15,140
|
|
|
|
$550,000
|
$9,000
|
|
$27,500
|
$0
|
$2,000
|
$588,500
|
|
$66,000
|
$0
|
$20,000
|
$2,140
|
$607,140
|
|
$18,640
|
|
$600,000
|
$10,000
|
|
$30,000
|
$0
|
$2,000
|
$642,000
|
|
$72,000
|
$0
|
$20,000
|
$2,140
|
$664,140
|
|
$22,140
|
|
$650,000
|
$11,000
|
|
$32,500
|
$0
|
$2,000
|
$695,500
|
|
$78,000
|
$0
|
$20,000
|
$2,140
|
$721,140
|
|
$25,640
|
|
$700,000
|
$12,000
|
|
$35,000
|
$0
|
$2,000
|
$749,000
|
|
$84,000
|
$0
|
$20,000
|
$2,140
|
$778,140
|
|
$29,140
|
| $750,000 |
$13,000 |
|
$37,500 |
$0 |
$2,000 |
$802,500 |
|
$90,000 |
$0 |
$20,000 |
$2,140 |
$835,140 |
|
$32,640 |
| $800,000 |
$14,000 |
|
$40,000 |
$0 |
$2,000 |
$856,000 |
|
$96,000 |
$0 |
$20,000 |
$2,140 |
$892,140 |
|
$36,140 |
| $850,000 |
$15,000 |
|
$42,500 |
$0 |
$2,000 |
$909,500 |
|
$102,000 |
$0 |
$20,000 |
$2,140 |
$949,140 |
|
$39,640 |
| $900,000 |
$16,000 |
|
$45,000 |
$0 |
$2,000 |
$963,000 |
|
$108,000 |
$0 |
$20,000 |
$2,140 |
$1,006,140 |
|
$43,140 |
| $950,000 |
$17,000 |
|
$47,500 |
$0 |
$2,000 |
$1,016,500 |
|
$114,000 |
$0 |
$20,000 |
$2,140 |
$1,063,140 |
|
$46,640 |
| $1,000,000 |
$18,000 |
|
$50,000 |
$0 |
$2,000 |
$1,070,000 |
|
$120,000 |
$0 |
$20,000 |
$2,140 |
$1,120,140 |
|
$50,140 |
 |
| $1,050,000 |
$19,000 |
|
$52,500 |
$0 |
$2,000 |
$1,123,500 |
|
$126,000 |
$0 |
$20,000 |
$2,140 |
$1,177,140
|
|
$53,640 |
| $1,100,000 |
$20,000 |
|
$55,000 |
$0 |
$2,000 |
$1,177,000 |
|
$132,000 |
$0 |
$20,000 |
$2,140 |
$1,234,140 |
|
$57,140 |
| $1,150,000 |
$21,000 |
|
$57,500 |
$0 |
$2,000 |
$1,230,500 |
|
$138,000 |
$0 |
$20,000 |
$2,140 |
$1,291,140 |
|
$60,640 |
| $1,200,000 |
$22,000 |
|
$60,000 |
$0 |
$2,000 |
$1,284,000 |
|
$144,000 |
$0 |
$20,000 |
$2,140 |
$1,348,140 |
|
$64,140 |
| $1,250,000 |
$23,000 |
|
$62,500 |
$0 |
$2,000 |
$1,337,500 |
|
$150,000 |
$0 |
$20,000 |
$2,140 |
$1,405,140 |
|
$67,640 |
| $1,300,000 |
$24,000 |
|
$65,000 |
$0 |
$2,000 |
$1,391,000 |
|
$156,000 |
$0 |
$20,000 |
$2,140 |
$1,462,140 |
|
$71,140 |
| $1,350,000 |
$25,000 |
|
$67,500 |
$0 |
$2,000 |
$1,444,500 |
|
$162,000 |
$0 |
$20,000 |
$2,140 |
$1,519,140 |
|
$74,640 |
| $1,400,000 |
$26,000 |
|
$70,000 |
$0 |
$2,000 |
$1,498,000 |
|
$168,000 |
$0 |
$20,000 |
$2,140 |
$1,576,140 |
|
$78,140 |
| $1,450,000 |
$27,000 |
|
$72,500 |
$0 |
$2,000 |
$1,551,500 |
|
$174,000 |
$0 |
$20,000 |
$2,140 |
$1,633,140 |
|
$81,640 |
| $1,500,000 |
$28,000 |
|
$75,000 |
$0 |
$2,000 |
$1,605,000 |
|
$180,000 |
$0 |
$20,000 |
$2,140 |
$1,690,140 |
|
$85,140 |
|
| $1,550,000 |
$29,000 |
|
$77,500 |
$0 |
$2,000 |
$1,658,500 |
|
$186,000
|
$0 |
$20,000 |
$2,140 |
$1,747,140
|
|
$88,640 |
| $1,600,000 |
$30,000 |
|
$80,000 |
$0 |
$2,000 |
$1,712,000 |
|
$192,000 |
$0 |
$20,000 |
$2,140 |
$1,804,140 |
|
$92,140 |
| $1,650,000 |
$31,000 |
|
$82,500 |
$0 |
$2,000 |
$1,765,500 |
|
$198,000 |
$0 |
$20,000 |
$2,140 |
$1,861,140 |
|
$95,640 |
| $1,700,000 |
$32,000 |
|
$85,000 |
$0 |
$2,000 |
$1,819,000 |
|
$204,000 |
$0 |
$20,000 |
$2,140 |
$1,918,140 |
|
$99,140 |
| $1,750,000 |
$33,000 |
|
$87,500 |
$0 |
$2,000 |
$1,872,500 |
|
$210,000 |
$0 |
$20,000 |
$2,140 |
$1,975,140 |
|
$102,640 |
| $1,800,000 |
$34,000 |
|
$90,000 |
$0 |
$2,000 |
$1,926,000 |
|
$216,000 |
$0 |
$20,000 |
$2,140 |
$2,032,140 |
|
$106,140 |
| $1,850,000 |
$35,000 |
|
$92,500 |
$0 |
$2,000 |
$1,979,500 |
|
$222,000 |
$0 |
$20,000 |
$2,140 |
$2,089,140 |
|
$109,640 |
| $1,900,000 |
$36,000 |
|
$95,000 |
$0 |
$2,000 |
$2,033,000 |
|
$228,000 |
$0 |
$20,000 |
$2,140 |
$2,146,140 |
|
$113,140 |
| $1,950,000 |
$37,000 |
|
$97,500 |
$0 |
$2,000 |
$2,086,500 |
|
$234,000 |
$0 |
$20,000 |
$2,140 |
$2,203,140 |
|
$116,640 |
| $2,000,000 |
$38,000 |
|
$100,000 |
$0 |
$2,000 |
$2,140,000 |
|
$240,000 |
$0 |
$20,000 |
$2,140 |
$2,260,140 |
|
$120,140 |
1 In the current 5% GST system, new homebuyers in Vancouver and British Columbia may be eligible for a one-time federal GST Rebate. The rebate is called the GST new housing rebate and can be completed by the homeowner themselves or by their legal team. The GST new housing rebate is equal to 36% (thirty six per cent) of the total 5% GST paid on the first $350,000 (three hundred and fifty thousand dollars) of the purchase price of a new Vancouver or BC home. For new homes between $350,000 to $400,000 (before property transfer taxes, GST and other closing costs), the amount of the federal GST new housing rebate phases until until it reaches zero at $450,000.
2 In the new 12% HST system, BC homebuyers of new homes and condos will still receive the same federal GST new housing rebate (as explained above) which is phased out when the purchase price of a new home hits $450,000. However, for new Vancouver and BC home buyers, they get an added HST rebate on the British Columbia portion of the Harmonized Sales Tax of 5% (five per cent). In other words, there is a proposed HST rebate of 5% on the 12% HST tax for homes valued under $400,000 only. For new homes costing more than $400,000, the maximum partical BC HST rebate is $20,000.
What Do The New Home BC HST Tax Increase Mean? How Much Is the BC HST Price Difference on New Homes in Vancouver?
As you run through the numbers in our BC HST Chart, you will see the differences between the Total Purchase Price in the Old System (5% GST) and the New System (12% HST). In the far right most column, we have calculated the New Home Cost Increase. The new home BC HST tax increase is quite profound when you consider that home ownership and real estate markets in British Columbia are among the highest in Canada already. With affordability a key topic for all residents in this province, the new home BC HST tax increase may mean that many more people will be priced out of the property markets, and forced to rent for a lot longer than anticipated. The BC HST price difference is also very significant. When considering some simple numbers such as the purchase price of a $100,000 new condo in BC, the BC HST price difference is $2,140, which is essentially a bit more than 2% more than the old system. When you work your way up to the $500,000 house, the new home BC HST tax increase stands at roughly $15,140, or 3% more, even after the HST rebate. When you’re talking about a $1 million home, the BC HST price difference is a whopping $50,140, which represents a 5% increase in total purchase price of a new home in Vancouver or BC. And the numbers get uglier as the purchase costs go up.
With the BC HST Price Difference, What Major Impact Does That Have on First Time Homebuyers?
Although an increase in purchase price of 2 to 5% may not sound like much, we are still talking about thousands of dollars. As the above BC HST Price Chart outlines, the new home BC HST tax increase is very substantial even for a small condo that costs $300,000. Do you know of many Vancouver first time homebuyers who can pay an extra $6,140 in BC HST on their new home upon closing? Remember that the major banks are unlikely to finance this 12% HST tax burden, which basically means that the first time home buyer will need to cover the BC HST price difference. Coming up with an extra $6,140 is tough enough, but when it comes to this new home BC HST tax increase for first time homebuyers, it is money out of their wallet that does not even increase the value of their home. The implication of the BC HST price difference and extra tax burden is that many first time homebuyer in Vancouver and British Columbia will stay away from the new construction housing market. The costs and the new home BC HST tax increase for first time homebuyers is too high, forcing many purchasers to either wait and rent for a while or to purchase resale Vancouver property instead. The secondary effect of the new BC HST price difference on new homes is that with fewer first time homebuyers driving the new housing market, the construction industry is likely to suffer. BC new housing sales and construction will drop, forcing many people in the industry to move out of the province or to seek alternate employment. For Vancouver first time homebuyers, July 1st, 2010 may be the last cut off date for you to find an affordable new home before the new BC HST tax increase takes effect. |
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