’000s will be added to new homes after HST
whao….. according to the following story from The Province, after the HST:
| A new home with price tag $800,00
+ $56,000 (currently PST not applied on new homes) - $20,000 (rebate) - $8000 (builders’ “input tax credit”) ——————————————————- + $28,000 |
You thought that’s the end of it? No!
Realtors’ commissions will rise from five to 12%, which will add several thousand dollars to the average commission of $40,000 on an $800,000 home.
Throw in professional fees — a home inspector, a notary, surveyor and appraiser — who’ll also be charging 12% HST — and that adds several hundred dollars more.
Here’s part of the article (full article here):
Homebuyers will be the biggest losers under the province’s controversial new harmonized sales tax.
Once the numbers are crunched, buyers of new or used homes — whether their first or their 31st — will be squeezed for tens of thousands more in taxes come July 1 of next year.
They’ll pay tax on the land, tax on the house and tax on any professional who performs a service in the real-estate transaction.
Under the HST just announced by the Liberal government, a seven-per-cent provincial sales tax will be applied to all new homes. Currently, it does not apply.
Buyers of new homes already shell out for the five-per-cent federal goods-and-services tax.
B.C. also charges a property-transfer tax of one to two per cent on a home, with a partial exemption for first-time homebuyers.
Builders say the HST will add $56,000 to the price of a new $800,000 home.
B.C. is promising to rebate the province’s share of the HST on new homes up to $400,000, with a flat $20,000 rebate on homes over that price.
That still leaves $36,000 in sales tax.
Builders will now be able to pass on the PST for building materials — about two per cent, which they now embed in the price of a new home.
Under the HST, they can claim that money back as an “input tax credit” — and that would knock $8,000 off the tax bill if they passed the saving along to the buyer.
But in all, it still leaves the buyer of a new $800,000 home paying as much as $28,000 more in tax, thanks to the dreaded HST.
In the Fraser Valley, where the average price for a detached house is $505,976, the HST would add $15,418.32, after the rebate.
Realtors® commission are not rising to 12%. The tax on the Realtors® commision will rise to to 12%. Right now, there is only the GST on the commission, which amount to a couple or few hundred dollars on typical properties.
A commission of $40,000 on an $800,000 would be extremely unusual. In most cases a commission might be around $10,000 or $11,000 per agent on a hi-end property like that, but it will vary depending on what the seller and agent nogotiate.
I think you misread some points of the article, but I certainly do agree that homebuyers, and the real estate market in general, are going to be hit pretty hard if this HST is implemented.
There is a lot of opposition to this tax, and I think it may be revisited.
hi nice to have you here,expert.what i cared is the influence on bc properties’ price after HST takes effect.what how do you predict recent and future tendency to vancouver real estate market?
by the way,i don’t hold out much hope for reconsidering of local residents’ protest against HST by bc government.
hard to say, dn. bc liberals have turned back on unpopular policies before if public objection is fierceful enough.
and i believe this time it’s quite fierceful
bby agent: do you think potential homebuyers will rush to buy property BEFORE next july to escape HST? will the remaining months of the year and half year of 2010 be particularly hot because of the perceived fear of the HST deadline?
sn,after i sent out my comments,i read Gabriel’s blog regarding HST.now there seems to be a new hope of revisiting HST at a later date.i will pray for it! and sn your questions to bby agent is exactly what i am wanting to know actually .see i am still struggling to articulate my thoughts in english….sigh.
Yes, I do think that if it this tax is implemented, that there will be a rush to buy beforehand (in addition to the current buying frenzy). If this tax is only on new homes, then afterward it will likely increase activity in resale homes, and may slow the sale of new homes. At this point, we have not been given much information on how this tax would be implemented.
The HST is a little extreme, but when things are put into perspective, current tax levels on purchases of a resale home are very low. We don’t have GST, so only the PTT (property transfer tax). So that is 1% on the first $200,000 and 2% on the balance on a modest $300,000 apartment. This is only about $4,000, which is only a little more than what I just paid in tax on my honda civic. On a new apartment, there would be the GST as well, bringing that figure close to $20,000, which is getting more significant.