Enhanced BC HST New Housing Rebate Frequently Asked Questions – Metro Vancouver Real Estate 2012

On February 17, 2012, BC Minister of Finance Kevin Falcon announced the provincial government’s intention to enhance the existing BC Harmonized Sales Tax (HST) New Housing Rebate by increasing the threshold to $850,000 from $525,000. The higher threshold will mean a higher maximum rebate of $42,500, up from $26,250.

Pending approval by the BC legislature, these changes will be effective from April 1, 2012 to March 31, 2013.

The province is expected to return to a Provincial Sales Tax/Goods and Services Tax system on April 1, 2013. The BC HST new housing rebate program will end on April 1, 2013, as the HST will no longer be in effect on and after that date.

Frequently Asked Questions – HST New Housing Rebate

How does the current BC HST new housing rebate work?

Currently, buyers of new homes to be used as primary residences are entitled to a 71.43% rebate on the 7% provincial portion of the HST that is levied on the purchase price of new homes. However, once the purchase price of a new home exceeds $525,000, the rebate is fixed at $26,250 and is not applied to the portion of the purchase price above $525,000.

How will the current BC HST new housing rebate change?

As of April 1, 2012 (and ending March 31, 2013), the rebate will increase for qualifying buyers of new homes that are priced up to $850,000 instead of the previous $525,000. Accordingly, the eligible maximum rebate will increase to $42,500 from $26,250. Qualifying buyers of new homes priced above $850,000 will receive the maximum rebate of $42,500, and the rebate will not apply to HST the purchaser paid on the portion of the purchase price above $850,000.

Purchase price	BC HST new housing rebate (ends Mar. 31, 2012)	Enhanced BC HST new housing rebate (Apr. 1, 2012- Mar. 31, 2013)
Example 1	$625,000	$26,250	$31,250
Example 2	$850,000	$26,250	$42,500
Example 3	$1,200,000	$26,250	$42,500

Is the April 1, 2012 date based on the contract/offer date or the completion date?

It doesn’t matter what date the parties entered into the contract or removed subjects. Provided the HST becomes payable between April 1, 2012 and March 31, 2013 buyers can be eligible for the enhanced BC HST new housing rebate.

When does the HST become payable?

On the sale of newly-constructed homes, the HST becomes payable on the earlier of the following dates:

• when the seller transfers ownership (also known as the completion date), OR
• when the seller transfers possession (also known as the possession date)

Example 1
A Contract of Purchase and Sale is entered into on December 15, 2011, the seller transfers ownership on March 15, 2012 and the buyer takes possession on April 2, 2012.

The buyer does not qualify for the enhanced BC HST new housing rebate.

Example 2
A Contract of Purchase and Sale is entered into on December 15, 2011, the seller transfers ownership on April 6, 2012 and the buyer takes possession on April 15, 2012.

The buyer qualifies for the enhanced BC HST new housing rebate.

Is there a problem with changing the dates in the contract so the buyer can take advantage of the enhanced BC HST new housing rebate?

Buyers who wish to approach sellers about taking advantage of the higher rebate by extending the completion and possession date(s) should be mindful of the rules surrounding the re-opening of the contract.

When does the HST become payable when the transaction involves a strata unit?

The only difference for stratas is where the strata plan hasn’t been registered by the date possession is transferred. HST is payable on the earlier of the following dates:

• when the seller transfers ownership (also known as the completion date), OR
• 60 days following the date the strata plan is registered.

Who is responsible for paying the HST? The builder or the buyer?

As was the case prior to the new transition rules, the buyer is responsible for paying the HST, and the seller is responsible for collecting and remitting it to the Canada Revenue Agency.

Are there any changes to which transactions qualify for the enhanced BC HST new housing rebate?

No. The enhanced BC HST new housing and new rental housing rebates will be subject to the same eligibility conditions as the existing HST rebates and will be administered by the Canada Revenue Agency (CRA).

The enhanced HST rebate threshold will be available with respect to newly-constructed homes purchased or built as a place of primary residence, or for the purpose of renting to residential tenants for a period of at least one year, where HST becomes payable on or after April 1, 2012 and before April 1, 2013.

HST is not payable on the purchase price of existing homes.

Are there any changes to the process for obtaining the rebate?

As with the current rebates, the buyer will be entitled to receive the enhanced rebate either by filing a rebate application directly with the CRA, or by assigning their right to the rebate to the seller who in turn will pay or credit the enhanced rebate amount at the time of purchase (in which case, the buyer must assign the rebate to the seller and the seller files the rebate application).

Only one rebate application can be sent to the CRA with respect to a home, either from the seller or the buyer, so the parties must be clear on who is taking responsibility for submitting the application.

Example
The contract for the purchase of a new home was entered into before the enhanced rebate was announced, though the purchase now qualifies for the enhanced BC HST new housing rebate. The purchase price includes HST if the buyer assigns the BC HST new housing rebate to the builder. Who is entitled to the enhanced rebate?

If the parties negotiated a Contract of Purchase and Sale where the purchase price included HST and the buyer assigned the HST rebate to the builder, then the builder would bear the risk and/or get the benefit of any future increase or decrease to the HST rate and/or rebate. The builder is not required to reduce the purchase price to account for the enhanced HST rebate.

In these circumstances, the parties must look to the specific terms of the contract.

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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!

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