Thinking of buying a new home and wondering how much HST will really cost you?

* First of all it’s important to clarify that HST is only applicable on the sale of newly constructed (or substantially renovated) homes. It is not added to the price of resale homes. For more information on how HST affects homebuyers click here.

Sales of newly constructed or substantially renovated homes are now subject to an HST tax of 12% on the purchase price. Fortunately there is some relief to help offset this tax from both the Federal and Provincial levels.

If you are buying a newly constructed home and plan to use it as your primary residence, you may qualify for two rebates: the BC New Housing Rebate and the Federal GST/HST New Housing Rebate.

WHAT IS THE BC NEW HOUSING REBATE?

The BC New Housing Rebate is a rebate of 71.43% of the provincial component of the HST paid (7% - formerly known as PST), up to a maximum of $26,250. The rebate maxes out at a purchase price of $525,000 and then stays flat at $26,250 for properties above that threshold. 

WHAT IS THE FEDERAL GST/HST NEW HOUSING REBATE?

The Federal New Housing Rebate is a rebate applied to the federal component of the HST paid (5%- formerly known as GST). The rebate reduces the federal part of the HST paid from 5% to approximately 3.5% for homes valued at $350,000 or less. The rebate is gradually reduced for homes valued from $350,000 to the maximum value of $450,000.

SO HOW MUCH WILL HST COST ME AS A BUYER?

As you can see calculating this net HST payable on new homes can be a bit of a pain for buyers (I know it has been for me!). 

Thankfully I recently came across this online calculator put out by the British Columbia Real Estate Association (BCREA) which helps you figure out exactly how much tax you’ll pay net of rebates. See for yourself, click the link below: 

SHELTER TAX CALCULATOR FOR BC

** You’ll see that this calculator accounts for HST, as well as Property Transfer Tax (PTT) which is 1% on the first $200,000 and 2% on the remainder of the purchase price. First Time Homebuyers buying a home under $425,000 are exempt from this PPT. (A partial exemption is available for homes between $425,000-$450,000)