Information about the new HST/PST housing transitional rules

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.

Note: This information is current to today, February 22, 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. CRA will be issuing a Q & A document soon which should clarify real estate issues.

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. (This is the day the tax is payable).

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 at 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 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 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 at 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 pay a transitional provincial tax of 2% on the full house price until before April 1, 2015. 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.

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. 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.

Recreational Property
All the same rules apply to recreational property that apply to other residential property. Your clients may be eligible
for a provincial enhanced New Housing Rebate if they buy a secondary vacation or recreational home outside Metro Vancouver and Capital Regional Districts priced up to $850,000.

Vacant Land:

HST paid on land
For owner-built homes where the HST was paid on the land, the owner may be eligible for a rebate on qualifying construction expenses (including land), up to a maximum of $42,500. There will be no phase-out of this rebate, such that owner-built homes with qualifying construction expenses over $850,000 will qualify for the maximum rebate of $42,500.

No HST paid on land
Where the HST was not paid on the land, the owner will be entitled to a new housing rebate on qualifying construction expenses (which would not include land), up to a maximum rebate amount of $28,475 (for example 67% of $42,500).

Enhanced New Rental Housing Rebate:

There is an enhanced provincial New Rental Housing Rebate. If your clients construct or substantially renovate a residential property to rent to tenants, your clients are eligible for a rebate up to $42,500 on units priced up to $850,000. There is a flat rebate of $42,500 for units priced above $850,000.

The first use of the home must be by a renter of the unit or as a primary residence by the owner for at least one year. Eligible units include:
• a detached, attached, condominium apartment or duplexes, with or without a legal secondary suite;
• a mobile or float home;
• units in a multiple unit building including long-term care residential facilities; or
• the land component of a single-unit or multiple-unit housing, where the land is leased or is a housing cooperative.

If your clients buy a new apartment which is not their principal residence and they don’t rent it, for example, if strata bylaws prohibit rentals, or your clients buy a new apartment to use on weekends, the unit is not eligible for the New Rental Housing Rebate.

But, if you have clients who buy a new rental apartment building so long as they rent all of the units, they will be eligible for a New Rental Housing Rebate for each unit up to a maximum rebate of $42,500 per unit.

If your clients build or substantially renovate rental property, they will be required to self-assess and pay the HST on or after April 2012 and before April 1, 2013.

Important Dates:

• November 18, 2009 – Date the transition rules from PST to HST came into effect.
• July 1, 2010 – Date the HST came into effect in BC.
• April 1, 2012 – Date the HST to PST transitional rules come into effect. The enhanced HST rebate comes into effect.
• April 1, 2013 – HST end date. GST on new homes is back in effect.

For More Information:

• Please visit: www.pstinbc.ca
• Please read: www.pstinbc.ca/media/2012_housing_rules_FEB.pdf
• Please phone the Canada Revenue Agency HST ruling line at: 1.800.959.8287

Sources:

• BC Ministry of Finance, Tax Information Notice. HST Notice #12, February 17, 2012.
• Canada Revenue Agency, HST ruling line at 1.800.959.8287

THE B.C. FIRST-TIME NEW HOME BUYERS BONUS

Subject to approval by the legislature, the B.C. government intends to implement a temporary BC First-Time New Home Buyers' Bonus. Effective February 21, 2012, to March 31, 2013, the bonus is a one-time refundable personal income tax credit worth up to $10,000.

Requirements to Qualify for the Bonus:

ELIGIBLE FIRST-TIME NEW HOME BUYER

You will qualify as a first-time new home buyer if:

                        You purchase or build an eligible new home located in B.C.;

                        You, or for couples, you and your spouse or common law partner, have never previously owned a primary residence;

                        You file a 2011 B.C. resident personal income tax return, or if you move to B.C. after December 31, 2011, you file a 2012 B.C. resident personal income tax return (you will not be eligible for the bonus if you move to B.C. after December 31, 2012);

                        You are eligible for the B.C. HST New Housing Rebate; and

                        You intend to live in the home as your primary residence.

ELIGIBLE NEW HOME

An eligible new home includes new homes (i.e., newly constructed and substantially renovated homes) that are purchased from a builder and that are owner-built. The bonus will be available in respect of new homes purchased from a builder where:

                        A written agreement of purchase and sale is entered into on or after February 21, 2012;

                        HST is payable on the home (e.g., HST will generally be payable if ownership or possession of the home transfers before April 1, 2013 - see further details below); and

                        No one else has claimed a bonus in respect of the home.

The bonus will be available in respect of owner-built homes where:

                        A written agreement of purchase and sale in respect of the land and building is entered into on or after February 21, 2012;

                        Construction of the home is complete, or the home is occupied, before April 1, 2013; and

                        No one else has claimed a bonus in respect of the home.

A substantially renovated home is one where all or substantially all of the interior of a building has been removed or replaced. Generally, 90% or more of the interior of the house must be renovated to qualify as a substantially renovated home (90% test).

Amount of the Bonus:

MAXIMUM AMOUNT

The bonus is equal to 5% of the purchase price of the home (or in the case of owner-built homes, 5% of the land and construction costs subject to HST) to a maximum of $10,000.

PHASE-OUT FOR HIGHER INCOME EARNERS

The bonus will be reduced based on an individual's/couple's net income (line 236 of your income tax return) using the following formula:

                        For single individuals, the bonus is reduced by 20 cents for every dollar in net income over $150,000 (bonus is reduced to zero at $200,000 net income).

                        For couples, the bonus is reduced by 10 cents for every dollar in family net income over $150,000 (bonus is reduced to zero at $250,000 family net income).

Additional Information:

APPLICATION PROCESS

Individuals must apply for the bonus through the B.C. government. Individuals can apply once application forms have been posted on the B.C. Ministry of Finance website later this year. Applicants will be required to submit documentation demonstrating eligibility for the bonus.

ELIGIBLE NEW HOME

The bonus is available in respect of new homes (i.e., newly constructed and substantially renovated homes) where HST is payable. HST will generally be payable on homes purchased from a builder where ownership or possession transfer before April 1, 2013. Potential buyers should consult with the builder to determine if the home will be subject to the HST.

For owner-built homes, the bonus will be based on land and construction costs subject to the HST. Eligible new homes will include:

                        Detached Houses, semi-detached houses, duplexes and townhouses,

                        Residential condominium units,

                        Mobile homes and floating homes, and

                        Residential units in a cooperative housing corporation.

For More Information:

INCOME TAXATION BRANCH

Ministry of Finance

Province of British Columbia

Telephone: (250) 387-3332 or 1 (877) 387-3332

Email: ITBTaxQuestions@gov.bc.ca

Tim Hill - 604.319.4700 - www.RoyalCityRealty.ca - timhill@royallepage.ca - Royal LePage Coronation West

I am writing this blog today with informaon on another new development in New Westminster that is yet to be launched to the public! Below is a little inside information for you on pricing, promotions and launch information.

01 Floor Plan - 1 bedroom - 630 sf - Starting at $261,900 - http://ow.ly/8XAcC

02 Floor Plan - 1 bedroom - 625 sf - Starting at $277,900 - http://ow.ly/8XAdS

03 Floor Plan - 2 bedroom - 847 sf - Starting at $377,900 - http://ow.ly/8XAf4

04 Floor Plan - 2 bedroom - 839 sf - Starting at $393,900 - http://ow.ly/8XAfH

05 Floor Plan - 1 bedroom - 652 sf - Starting at $286,900 - http://ow.ly/8XAgh

06 Floor Plan - 2 bedroom - 880 sf - Starting  at $363,900 - http://ow.ly/8XAh1

TH01 Floor Plan - 2 bedroom - 1070 sf - Priced at $349,900 - http://ow.ly/8Z0y7

TH02 thru TH08 Floor Plans - 3 bedroom - 1181 to 1321 sf - Priced between $404,900-$429,900 - http://ow.ly/8Z0y7

There are two promotions available only to the first 30 purchasers in Northbank.

1) The first 30 homes that are sold in this development will receive a $3000 discount on 1 bedroom homes and a $5000 discount on 2 bedroom homes.

2) The first 30 purchasers will also only be required to put a total of 10% deposit prior to completion whereas the remaining purchasers will be subject to a 20% total deposit.

The deposit structure for this development is $5000 upon purchase, 5% of the purchase price (less initial $5000 deposit) due within 7 calendar days of vendor acceptance, 5% of purchase price due within 10 days of receipt of the Amendment to the Disclosure Statement and 5% of the purchase price due 60 days after the receipt of the Amendment to the Disclosure Statement.

Estimated completion of this development is 18 months or late 2013, but it is possible they will run closer to 24 months putting the completion into early 2014. There is a total of 100 apartment's, 8 town houses and 1 commercial unit in this development totaling 109 strata lot's.

As one of Ballenas VIP Realtors they allowed me to do a private preview today and that is how I received this first hand information. The sales manager has also given me permission to bring clients through this week as they are going to begin selling to their VIP List as soon as the Developer's Disclosure Statement is finalized. This is likely to be in the next few days. The official grand opening to the general public will be at the end of February so if you think this new development may be of interest to you I urge you to get in contact with me as soon as possible. I would be happy to set up a private viewing for you which will allow you to view the display kitchen, floor plans and the scale building schematic up close. By doing this, you will also be given an opportunity to purchase the homes in Northbank before they are released to the general public! Please feel free to contact me if you have any questions or concerns.

Tim Hill - Real Estate Advisor

Royal LePage Coronation West Realty

Direct: 604.319.4700

Email: timhill@royallepage.ca

www.RoyalCityRealty.ca