BC Budget brings good news for new home buyers in 2012 – Vancouver Real Estate News
For several years, the Real Estate Board has been telling the government that too many first-time buyers were sitting on the fence because taxes were making home ownership unaffordable. On February 21, 2012, we learned that the government had listened and has implemented a temporary BC First-Time New Home Buyers’ Bonus.
Effective immediately to March 31, 2013, the bonus is a one-time grant for eligible first-time new home buyers. It is equal to 5% of the purchase price of the home, or if you are building your own home, 5% of the land and construction costs subject to the HST. The maximum bonus is $10,000 and it will come in the form of a cheque Hom the BC Ministry of Finance.
How does this new program work?
You will qualify as a first-time home buyer if:
- You buy or build an eligible new home in BC;
- You have never owned a primary residence;
- You file a 2011 BC resident personal income tax return, or if you move to BC after December 31, 2011 and you file a 2012 BC resident personal income tax return;
- You enter a written agreement of purchase and sale on or after February 21, 2012;
- You are eligible for the BC HST New Housing Rebate; and
- You intend to live in the home as your primary residence.
Eligible new homes include detached and semi-detached houses, duplexes, townhouses, condominiums, mobile and iloat homes and residential units in a cooperative housing corporation.
Individual home buyers are eligible for the full bonus based on a net income up to $150,000. The bonus is reduced by 20 cents for every dollar in net income over $150,000 and reduces to zero for buyers eaming $200,000 or more. For couples, the full bonus is based on a net income up to $150,000. The bonus is reduced by 10 cents for every dollar in income over $150,000 and reduces to zero for couples eaming $250,000 or more.
HST transition rules add savings
If you have already signed or will sign an agreement to buy a new home and you will take possession after April 1, 2012 and before April 1, 2013, you will save money on the HST because of the creation of the BC Enhanced New Housing Rebate.
How do the savings add up?
Example: A home priced at $800,000 (before the taxes)
|Before First-Time New Home Buyers’ Bonus & Enhanced New Housing Rebate||During First-Time New Home Buyers’ Bonus & Enhanced New Housing Rebate|
|HST Rebate: $26 250||HST Rebate: $40,000|
|No First-Time New Home Buyers Bonus||First-Time New Home Buyers’ Bonus: $10,000|
|Total Savings: $26,250||Total Savings: $50,000|
Cost savings calculation: 12% HST on $800,000 home price = $96,000; $96,000 x 5 / 12 (GST component) = $40,000; $96,000 x 7 /12 = $56,000 (Provincial component) x .7143 = $40,000. *Assuming the buyer’s income doesn’t exceed the maximum threshold of $150,000.
If you have any real estate questions or if you are thinking of buying or selling your home, please contact James Louie Chung, Metro Vancouver REALTOR® at [email protected] or call / text ( 6 0 4 ) 7 1 9 — 6 3 2 8 today!