7 replies to this topic

[Mike K.]

With home sales having decreased to multi-year lows, what impact has the HST had in this? Surely some buyers have opted to wait out the transition rules and/or defer purchases until the HST has been by PST/GST in mid-2012?

[MarkoJ]

Most home sales are re-sales; therefore, HST would not be a factor.

None the less HST has had an impact on new home sales. This is difficult to quantify but my firsthand experience has been that a lot of buyers looking for new property are waiting for the transition rules.

I personally don't think final purchase price will change; however, the belief among a lot of buyers is that prices will be lower. Let me give you an example. In November I listed a brand new home in Fernwood for $799,000 + HST ($868,xxx Net HST included). It sold quickly and the buyer loves the home but expressed that it was painful to pay the HST.

What the buyer doesn't realize is the builder was working backwards from what he thought the home was worth - about $870,000. If we were still under the old GST system the home would have been priced at $824,000 + GST.

Why is this? Because the new home is always competing against re-sale homes + a small premium. Homes are not automobiles. No one is going to pay $900,000 plus HST for a brand new 2011 home if the 2010 built home next door is $900,000 and no HST.

Just like when the HST came in, when it goes out, my prediction is that the final purchase prices will remain relatively the same (pending no secondary factors such as a poor economy, change in interest rates, etc.). I think that most developments will just change their advertising from "$199,900 including HST" to "$199,900 including GST," or "$199,900 including GST & PST."

However, a lot of buyers will opt to wait.

[Hikermatt]

Hey Marko,

Just read the new announcement on what the transitional taxes will be on new homes until the pst and gst is reintroduced. I purchased a pre-sale in promontory as well and wanted to get an idea of how these changes will affect my end price.

Thanks

[Sparky]

Welcome to Vibrant Victoria Hikermatt.

[Nparker]

Bear in mind that paying real estate commissions costs sellers 7% more than before HST resulting is less net profit (or a greater loss I suppose).

[Hikermatt]

Thanks Sparky,

I have been following a few of the threads for a couple of months now, pretty interesting stuff.

[MarkoJ]

Hey Marko,

Just read the new announcement on what the transitional taxes will be on new homes until the pst and gst is reintroduced. I purchased a pre-sale in promontory as well and wanted to get an idea of how these changes will affect my end price.

Thanks

Your end price shouldn't increase; however, I don't want to lay out calculations in terms of potential savings as 2014 completion is a long way out and legislation can change, contracts buyer enter into with Bosa may vary, and the building is under construction (will be it be considered substantially completed April 1st, 2013)? Taxes can be complicated and sometimes when I call my accountant he has to call appropriate people for clarification.

I bought my 834 pre-sale in 2009 and was glad to learn that I bought a month or so ahead of a 2009 deadline which entitled me to Net GST.....basically saved me about $5,000 less in taxes on completion. I was unaware of this deadline I had gotten in under until a few weeks prior to completion.

[MarkoJ]

Some of the key elements include:
- The B.C. new housing rebate threshold will be increased to $850,000, effective April 1, 2012 with a maximum rebate of $42,500.
- A provincial grant of up to $ 42,500 will be available for purchasers of new secondary vacation or recreational homes outside the Greater Vancouver and Capital regional districts priced up to $850,000, effective April 1, 2012.
- For newly built homes where construction begins before April 1, 2013, but ownership and possession occur after, purchasers will not pay the seven per cent provincial portion of the HST. Instead, purchasers will pay a temporary, transitional provincial tax of two per cent on the full house price.
- The temporary housing transition measures will be in place for two years, until March 31, 2015. The tax only applies to homes where construction begins before the transition date and ownership and possession occur after.