|Posted on April 17, 2010 at 2:10 AM|
Well the sun is shining, and so is the real estate market in the Okanagan. After a sluggish start in the first three months of the year, things are heating up. It's been evident that the market is catching up to the hot real real estate markets in Vancouver and Toronto. The steady sales of homes might be the result of the spring season, or the result of rising interest rates and the anticipation of the HST tax coming into effect July 1, 2010.
I wanted to research the new HST tax and get to the details on how its going to affect us all, including how it changes the cost of real estate. The new system is a bit confusing, so always consult the advise of your local accountant in regards to the HST tax before selling or buying real estate.. I beleive it will be more clearer to us ( real estate agents) all when more infomational material is published by the BC government.
This is what I make of it.
Harmonized Tax (HST) consists of a 5% Federal Tax and a 7% Provincial tax = 12 % tax on most goods and services.
Any supply of real property located in BC is subject to the HST tax unless it is specifically exempted from the tax. The following are exempt real estate property transactions.
* Most residential rentals
* Sales of used residential housing
* Sales of personal use of land by an indivdual or an estate
* certain sales of farmland, where farmland is for personal use
* Most supplies of real property by charities, non-profit organizations, universities, colleges, schools and hospital authorites.
The following types of real property are taxable.
* commercial rentals,
* sales of new (or substantially renovated) residential housing
* sales of commericlial property, and
* most supplies of real property by a municipality, province or the federal government
The real estate commission on all real estate transactions is subject to the HST tax also.
This is just the short general version of the new tax on July 01, 2010, and certainly they are some grey area's when it comes to real estate tranactions. I advise you to consult with your accountant if your selling or buying with a agent or by sale by owner. It going to take some time for everyone to adjust to the news rules and regulations of the HST.
The downside of the new tax is on new developments, both in houses and condo projects. Commercial property is also subject to the tax and it will be a major factor in negotiating the final price of the property.
Now the Good News of the HST.
According to the BC governement website, a proposed deal is to increase the HST housing rebate from $400,000 to $525,000 to ensure on average, purchasers of new homes up to $525,000 pay no more tax due to harmonization than is currently embedded as PST.
In regards to a night out at a local restaurant, we now pay 10% liquor tax, 5% GST AND 7% PST. On July 01, 2010, it will be 12% HST tax on the entire bill. So we saving a little tax from the liquor tax.
It interesting to hear from the government website, that the HST will save employers $2 billion dollars and creat investment and new jobs. I certainly hope this result.
Whether we agree with it or not, its coming July 01, 2010 to all neighborhoods across BC, and the best thing is to get educated on it. The best way is to visit the BC government website at www.gov.bc.ca/hst/ and read everything you can and write down questions for your accountant to answer. Remember, I'm a real estate agent and not a tax expert, so this blog post is for general infomation only and it's contents shall not be relied upon during a real estate transaction. Please visit the link to the governement website regarding HST.
With that in mind, I beleive the BC governement has us all a bit confused, so I'm going to take the time and read the details on their website concerning HST, therefore be ready for July 01, Happy Canada Day !