If you are planning on buying a new home over the next two years, then you need to know about the 2% BC Transition Tax.

It is a new tax that comes into effect on April 1, 2013. It will apply to the sale of new residential homes that are 10% or more complete as of April 1, 2013. The 2% BC Transition Tax will end on March 31, 2015. 

before April 1, 2013April 1, 2013

April 1, 2015

12% HST
applies for new home:
possesion
OR
ownership
5% GST applies
+
2% Transitional Tax
for new homes:
• 10% or more complete
• possesion or ownership
before April 1, 2015

5% GST applies

Source: BCREA PST TransitionRules website www.bcrea.bc.ca/government-relations/pst-transition-rules 

The 2% BC Transition Tax applies to the full price of a new home, which is 10% or more complete, where ownership or possession is on or after April 1, 2013, but before April 1, 2015. The 5% GST also applies to the full price of a new home, where ownership or possession is on or after April 1, 2013.

With the end of the HST and the return to the PST/GST system, the BC government chose to introduce the 2% BC Transition Tax as a way, in their words, “to ensure the equitable application of tax for purchasers of new residential homes currently under the HST system” and after April 1, 2013 when the province returns to GST on new residential homes. The government also wishes to replace some of the revenue lost through the return to the PST.

BC’s portion of the HST will no longer apply to newly built homes where construction begins on or after April 1, 2013. Builders will once again pay 7% PST on their building materials (construction inputs). The provincial government asserts that on average, about 2% of the home’s final price is embedded PST that builders pay on their building materials.

The Transition Tax rebate for sellers of new housing will be calculated on its degree of completion as of April 1, 2013
Degree of construction complete as of April 1, 2013Transition Tax Rebate as a % of consideration or fair market value
Less than 10% not applicable
10% ≤ and <25% 1.5%
25% ≤ and <50% 1.0% 
50% ≤ and <75% 0.5%
75% ≤ and <90%  0.2% 
90% or greater 0.0% 

For newly built homes where construction begins before April 1, 2013, but ownership and possession transfer afterwards, purchasers will not pay the 7% provincial portion of the HST. Instead, purchasers will pay 5% GST and the 2% Transition Tax on the full house price. The Transition Tax rebate for builders (sellers) recognizes that the builder will not be able to claim input tax credits on the PST paid on building materials acquired after March 31, 2013. The rebate is available where both of the following conditions are met:

  • The 2% BC Transition Tax applies to the sale of new housing; and
  • Construction or substantial renovation is at least 10%, but not more than 90%, complete before April 1, 2013.

 


“These transition rules are part of a comprehensive package designed to provide equity for buyers of newly built homes and clarity and certainty for the construction industry – an important job creator in our province.”

 

 

 

 

- former Finance Minister Hon Kevin Falcon, May 28, 2012

Read full post
Categories:   Altamont, West Vancouver Real Estate | Arbutus, Vancouver West Real Estate | Birchland Manor, Port Coquitlam Real Estate | Brighouse South, Richmond Real Estate | Brighouse, Richmond Real Estate | Burke Mountain, Coquitlam Real Estate | Cambie, Vancouver West Real Estate | Canterbury WV, West Vancouver Real Estate | Central Coquitlam, Coquitlam Real Estate | Coal Harbour, Vancouver West Real Estate | Collingwood VE, Vancouver East Real Estate | Downtown NW, New Westminster Real Estate | Downtown VW, Vancouver West Real Estate | Dunbar, Vancouver West Real Estate | Fairview VW, Vancouver West Real Estate | False Creek, Vancouver West Real Estate | Fraser VE, Vancouver East Real Estate | Gilmore, Richmond Real Estate | Hamilton RI, Richmond Real Estate | Harbour Place, Coquitlam Real Estate | Kerrisdale, Vancouver West Real Estate | Kitsilano, Vancouver West Real Estate | Lackner, Richmond Real Estate | MacKenzie Heights, Vancouver West Real Estate | Marpole, Vancouver West Real Estate | McLennan North, Richmond Real Estate | McNair, Richmond Real Estate | Metrotown, Burnaby South Real Estate | Monthly Statistical Report | Oakridge VW, Vancouver West Real Estate | Parkcrest, Burnaby North Real Estate | Point Grey, Vancouver West Real Estate | Port Moody Centre, Port Moody Real Estate | Property Tax | Queensborough, New Westminster Real Estate | Quilchena, Vancouver West Real Estate | S.W. Marine, Vancouver West Real Estate | Seafair, Richmond Real Estate | Sept eNewsletter | Shaughnessy, Vancouver West Real Estate | South Cambie, Vancouver West Real Estate | South Granville, Vancouver West Real Estate | South Slope, Burnaby South Real Estate | Southlands, Vancouver West Real Estate | Sunshine Hills Woods, N. Delta Real Estate | Terra Nova, Richmond Real Estate | University VW, Vancouver West Real Estate | West Cambie, Richmond Real Estate | West End VW, Vancouver West Real Estate | Westwood Plateau, Coquitlam Real Estate | Woodwards, Richmond Real Estate
Categories
The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Real Estate Board of Greater Vancouver (REBGV), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the REBGV, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the REBGV, the FVREB or the CADREB.