This year both home-buyers and sellers will face new taxes and legislation as the proposed Harmonized Sales Tax (HST) is scheduled to take effect July 1, 2010. The proposed HST has become a hot subject in both the media and on social networking sites. One Facebook group, opposed to the HST, has close to 130,000 members voicing their opinions and thoughts on the subject. As a REALTOR® with RE/MAX Camosun in Victoria, BC, I have already received numerous inquiries from clients about the new costs associated with HST when purchasing or selling a property.

The Victoria real estate market had a year of recovery during 2009 and it seems this momentum will carry on into 2010. The direct impacts of the proposed HST on the real estate market will not be known for some time yet, but there are already signs of confusion as to which properties will be subject to HST. At a recent open house, I had a prospective home-buyer ask how much the HST would increase her costs if she were to purchase the property. She was surprised when I told her that the purchase price would not be subject to the new HST as it is a resale and not a new property. The prospective buyer was under the impression that all properties bought and sold would soon be subject to the 12% HST. This is a perfect example of how the information and facts surrounding HST need to be clearly explained in each industry or sector to properly inform the client.

As it currently stands, only NEW properties sold will be subject to HST. New property sales are already subject to the 5% Government Sales Tax (GST), but come July 1, 2010 they will be taxed at the 12% HST. To offset the impacts of HST on new properties, the provincial government is offering a rebate of up to a maximum of $26,250 of the provincial component of the HST for new homes purchased as a primary residence. The aim of the rebate is to ensure that purchasers of new homes priced up to $525,000 will not pay more tax than under the current system.
The new housing rebate for HST will be subject to similar eligibility requirements as the current new housing rebate for GST. New properties sold by a builder will have the option of the builder paying or crediting the new housing rebate directly to the buyer at the time of purchase. The builder option is similar to the current new housing rebate on GST. Individual purchasers will also be able to apply directly to the Canada Revenue Agency (CRA) for the rebate.

Along with new home purchases, a large number of other services associated with a Real Estate transaction will soon be subject to HST as well. Such services include building inspections, REALTOR® commissions, lawyer fees and moving costs.

While the proposed Harmonized Sales Tax will no doubt have an impact for some purchasers, proper planning with a mortgage broker and Real Estate Agent should help to ensure that this new tax system does not inhibit those who are prepared from entering into the housing market.

For more information on HST and Real Estate, please see my website http://curtislindsay.com or on Twitter at http://twitter.com/VicHomes4Sale

Victoria BC Real Estate for Sale l Homes l Condo’s l Townhomes – Curtis Lindsay – RE/MAX Camosun

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Real Estate and Homes for sale in Victoria BC