New Home 5% GST and 2% BC Transition Tax Calculator
(This calculator is for entertainment purposes only, and is not to be relied upon for making actual HST/GST calculations or determinations,and subject to change without notice. )
If you are planning on buying a new home over the next two years, then you need to know about the 2% BC Transition Tax.
It is a new tax that came into effect on April 1, 2013. It applies to the sale of new residential homes that are 10% or more complete as of April 1, 2013. The 2% BC Transition Tax will end on March 31, 2015. Learn more >>
|before April 1, 2013||April 1, 2013||
April 1, 2015
applies for new home:
|5% GST applies
2% Transitional Tax
for new homes:
• 10% or more complete
• possesion or ownership
before April 1, 2015
5% GST applies
Source: BCREA PST TransitionRules website www.bcrea.bc.ca/government-relations/pst-transition-rules
The 5% GST also applies to the full price of a new home, where ownership or possession is on or after April 1, 2013.
With the end of the HST and the return to the PST/GST system, the BC government chose to introduce the 2% BC Transition Tax as a way, in their words, “to ensure the equitable application of tax for purchasers of new residential homes currently under the HST system”. The government also wishes to replace some of the revenue lost through the return to the PST.
BC’s portion of the HST will no longer apply to newly built homes where construction begins on or after April 1, 2013. Builders will once again pay 7% PST on their building materials (construction inputs). The provincial government asserts that on average, about 2% of the home’s final price is embedded PST that builders pay on their building materials.
The Transition Tax rebate for builders (sellers) recognizes that the builder will not be able to claim input tax credits on the PST paid on building materials acquired after March 31, 2013. The rebate is available where both of the following conditions are met:
- The 2% BC Transition Tax applies to the sale of new housing; and
- Construction or substantial renovation is at least 10%, but not more than 90%, complete before April 1, 2013.
|The Transition Tax rebate for sellers of new housing will be calculated on its degree of completion as of April 1, 2013|
|Degree of construction complete as of April 1, 2013||Transition Tax Rebate as a % of consideration or fair market value|
|Less than 10%||not applicable|
|10% ≤ and <25%||1.5%|
|25% ≤ and <50%||1.0%|
|50% ≤ and <75%||0.5%|
|75% ≤ and <90%||0.2%|
|90% or greater||0.0%|
- See more at: http://www.rebgv.org/2-bc-transition-tax-new-homes-coming-april-1-2013#sthash.eJqe8gSn.dpuf
*Properties where construction started after April 1, 2013 will have approximately 2% PST embedded in the purchase price
**Tenant must be using the property as their principal residence
***Only available on properties located outside of Great Vancouver and the Capital Regional Districts
‡ Including 2% B.C. Transition Tax, if applicable
On April 1, 2013, the Harmonized Sales Tax (HST) was replaced by the federal Goods and Services Tax (GST) and the BC Provincial Sales Tax (PST).
When does HST apply, and when does GST apply?
The 12% HST applies if the seller transfers either possession or ownership of a new home to the buyer before April 1, 2013.
The 5% GST applies if the seller transfers both possession and ownership of a new home to the buyer on, or after, April 1, 2013.
The PST and real estate commissions
The return to the PST will affect the taxes REALTORS® charge on their services.
• If a commission or fee is payable before April 1, 2013, the 12% HST applies.
• If a commission or fee is payable on or after April 1, 2013, then the 5% GST applies.
When does the commission become payable?
The standard Multiple Listing Contract provides that a commission is payable on the earlier of the following:
• completion date under the Contract of Purchase and Sale, or
• the actual date that the sale completes.
When is commission payable and which tax applies?
What about the 2% Transition Tax?
The 2% BC Transition Tax will apply to the sale of new residential homes if ownership and possession take place on or after April 1, 2013 and the construction or substantial renovation of the new home is 10% or more complete as of April 1, 2013.
The 2% tax ceseases to apply if ownership and possession are on or after April 1, 2015. The BC Government asserts the 2% reflects an embedded PST builders pay on materials (construction inputs). Under the HST, builders can write off that embedded 2%, but they cannot under the GST.
BC Government resources: the Ministry of Finance has prepared bulletins, seminars, videos, registration, and the new online services option, eTaxBC. Visit: www.gov.bc.ca/pst.
BCREA resources: the BC Real Estate Association has developed a website which includes calculators, helpful FAQ’s and
informative infographics at: www.bcrea.bc.ca/government-relations/hst-pst-resources.
Source of chart: www.bcrea.bc.ca/government-relations/pst-transition-rules
- See more at: http://www.rebgv.org/returning-gst-and-pst#sthash.gNRu3Cus.dpuf