Home buyers may be in for a shock when the 12% Harmonized Sales Tax (HST) kicks into effect on July 01, 2010.  According to VibrantVictoria.ca discussion forum member “Roger,” who happens to be a prolific participant in the Real Estate News discussion thread, the cost to purchase a home will increase by 1.9%, or $8,000 on a $400,000 home, and 3.9%, or $20,250, on $575,000 home (considered the Greater Victoria average price).

Roger’s calculation is as follows:

$400,000 house
- Total HST: 48,000
- GST rebate: 3,150
- BC rebate: 20,000
- Total Taxes Paid: 24,850 compared to 16,850 now
- Increase of $8,000 which is a jump in total purchase price of 1.9%

$575,000 house, the average price in Greater Victoria
- Total HST: 69000
- GST rebate: 0
- BC rebate: 20,000
- Total Taxes Paid: 49,000 compared to 28,750 now
- Increase of $20,250 which is a jump in total purchase price of 3.4%

“The BC government is effectively using the same revised HST formula as Ontario even though our housing prices are much higher. The rebate would effectively apply the provincial portion of the HST at a rate of two per cent on the first $400,000 of the purchase price of a new home and at a rate of seven per cent on the portion above $400,000,” writes Roger, and further adds that “this is absolutely the wrong time for the BC government to be making another tax grab on housing in this province. BC has the worst affordability levels of any province in Canada and British Columbians are struggling with a recession.”

To follow the discussion on the HST, refer to this thread.

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