HST tim­ing im­pe­tus to buy now in B.C.

Calgary Herald - Calgary Herald New Condos - - Recreation & Investment Properties -

As a de­vel­oper, Dave Rae’s job is his life — his bread and but­ter. That’s why he wants to help buy­ers in the wake of B.C.’s de­ci­sion to in­tro­duce a Har­mo­nized Sales Tax (HST) on July 1.

“De­lay­ing the de­ci­sion to pur­chase recre­ational prop­erty this year will cost buy­ers thou­sands of dol­lars,” he says.

As the prin­ci­pal in Col­umere Park De­vel­op­ments, Rae and his wife, Donna, are try­ing to off­set some of the fi­nan­cial im­pact of what B.C.’s de­vel­op­ment in­dus­try is call­ing an ill-timed tax de­ci­sion.

Sam Bo­guslavsky runs a big­ger ship un­der Sable De­vel­op­ments, which in­cludes Sable Re­sorts and its Legacy on Mara Lake de­vel­op­ment. But he is in full agree­ment with what the Raes are say­ing and he has his own strat­egy for deal­ing with it.

The HST, which is also be­ing in­tro­duced by On­tario, com­bines the pro­vin­cial sales tax with the fed­eral GST.

In the case of B.C., the HST will be 12 per cent — and there will be no re­bates for recre­ation prop­er­ties.

Rae is de­vel­op­ing Spir­its Reach, a 200-hectare lake­side com­mu­nity on Columbia Lake just south of Fair­mont Hot Springs, B.C.

The lo­ca­tion of Spir­its Reach in the heart of the Columbia Val­ley, a favourite play­ground for Cal­gar­i­ans, has made it a pop­u­lar sec­ond-home des­ti­na­tion for many from the east­ern side of the Rock­ies.

To date, the ma­jor­ity of buy­ers have come from Cal­gary and other cen­tres in Al­berta. In­ter­est has also been re­ceived from the United States and Eng­land, says Donna.

Bo­guslavsky also looks to the east side of the Rock­ies for much of his busi­ness.

“Al­ber­tans are big con­sumers of B.C, ski chalets, re­sort con­dos and lake­side cabins,” he says. “This new tax will di­rectly im­pact them, es­pe­cially be­cause the HST does not of­fer a re­bate for recre­ational prop­er­ties.”

It’s on those con­sumers the Raes and Bo­guslavsky will fo­cus their busi­nesss strate­gies.

“If you’re on the fence about pur­chas­ing prop­erty right now, de­lay­ing that de­ci­sion means you’ll be pay­ing tens of thou­sands more for the same prod­uct,” says Dave. “It’s money that doesn’t build eq­uity in your in­vest­ment, but goes straight to gov­ern­ment cof­fers.”

As part of its HST cam­paign, Spir­its Reach is pro­vid­ing an in­cen­tive to pur­chase by re­duc­ing prices.

Dave of­fers the ex­am­ple of an a 1,800-square-foot, three-bed­room, 2 ½-bath home at Spir­its Reach.

The home is priced at $519,000 (re­duced by $150,000 from the for­mer price) plus five per cent GST for a to­tal of $544,950.

With the in­clu­sion of the ex­tra seven per cent from the HST, the price climbs to $581,280.

“Mak­ing the de­ci­sion to pur­chase be­fore July 1 will save buy­ers $36,330 on this prop­erty,” he says.

But the added cost of the HST doesn’t end at pur­chase. Monthly mort­gage pay­ments and to­tal in­ter- est paid will go up as well.

With a down pay­ment of 25 per cent for a cur­rent one-year fixed mort­gage — at an in­ter­est rate of 3.4 per cent and a 20-year amor­ti­za­tion — the HST will cost buy­ers an ex­tra $155.99 per month.

That’s an ex­tra $10,263.72 in in­ter­est over the life of the mort­gage on this prop­erty.

Com­bin­ing the sav­ings of­fered by Spir­its Reach, the pre-HST sav­ings and the in­ter­est sav­ings, buy­ers who pur­chase be­fore July 1 will save a to­tal of $196,593.72.

“Mak­ing the de­ci­sion to pur­chase a sec­ond home is a big one, but the num­bers clearly show that wait­ing un­til af­ter July 1 will in­crease the fi­nan­cial com­mit­ment and re­duce the in­vest­ment po­ten­tial,” says Dave. “The goal of our price ad­just­ments is to help our home­own­ers build eq­uity, in­stead of pay­ing taxes.”

Homes in Spir­its Reach’s lake­front neigh­bour­hood, Spirit of the Lake, range from $489,000 to $699,000.

The Raes are de­vel­op­ing the land to ac­com­mo­date 400 homes on prop­erty their com­pany owns on both sides of High­way 93/95.

Ac­tiv­ity is cur­rently cen­tred in the Spirit of the Lake neigh­bour­hood, where 11 of 34 lake­side homes re­main — with phases two and three set for release this year.

Three other com­mu­ni­ties are on the west side of the high­way.

Hardie Creek Cabins is slated to be re­leased next year and Mus­tangs Cross­ing is ex­pected to come to mar­ket in two years, with Spir­its Rise in three years. A large recre­ation cen­tre is to open in five years.

Bo­guslavsky says that with Legacy on Mara Lake res­i­dences priced from $300,000 to more than $1 mil­lion, buy­ers can save be­tween $28,000 and $70,000 if they pur­chase be­fore July 1.

The first phase of the $50-mil­lion, 160-unit project has been com­pleted. Work on the sec­ond phase of 95 units won’t be­gin un­til the first phase is sold out.

To date, fewer than 20 re­main. They range from $300,000 to more than $1 mil­lion and mea­sure from 600 to 2,000 square feet.

Dave and Donna Rae of Col­umere Park De­vel­op­ment, which is con­struct­ing Spir­its Reach.

CRANE TAKES FLIGHT

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