GIVE AND TAKE IN B.C. BUDGET
Break for new homebuyers, HST rebate to rekindle industry
“What this does . . . is enables all these so-called property virgins to get on that first rung of the home-ownership ladder. Right now . . . a lot of [first-time, new-home buyers] go to the bank of mom and dad.”
— Peter Simpson, Greater Vancouver Home Builders Association
B.C.’S inaccessible housing market was re-addressed in Tuesday’s budget, with first-time, new-home buyers and seniors getting welcomed tax breaks, according to housing industry experts.
Peter Simpson, president of the Greater Vancouver Home Builders Association, says a tax credit of up to $10,000 for first-time, new-home buyers makes for a good marriage with the HST transitional rules released last week.
“What this does . . . is enables all these so-called property virgins to get on that first rung of the home-ownership ladder,” said Simpson. “Right now, it’s difficult acquiring a down payment and, typically, a lot of [firsttime, new-home buyers] go to the bank of mom and dad.”
On Friday, B.C. Finance Minister Kevin Falcon announced the government will raise its new-housing HST rebate threshold to $850,000 from $525,000 to help offset the consumer cost of the unpopular tax.
Tuesday’s announcement is applicable to first-time homeowners who buy or build a new home in B.C. between Feb. 21, 2012, and April 1, 2013 — when the Harmonized Sales Tax will be scrapped for good.
The HST doesn’t apply to previously occupied housing.
The bonus is equal to five per cent of the purchase price of the home to a maximum of $10,000. In the case of owner-built homes, the bonus is equal to five per cent of the land and construction costs.
The bonus is also dependent on an individual’s or couple’s net income. For singles making over $150,000, the bonus is reduced by 20 cents for every dollar in net income earned.
For couples, the bonus is reduced by 10 cents for every dollar in net income earned over $150,000.
The bonus doesn’t apply to individuals making $200,000 or more a year and couples making over $250,000 a year combined.
The first-time, new-home-buyers’ tax break is expected to cost the government $24 million over the next year.
Simpson says the new tax break applies to a wide array of property virgins, considering the “broad range of housing types” included.
Highrise condos, low-rise condos and townhouses are “all within range of typical first-time homebuyers,” he said.
To Jean Openshaw, sales manager for Bosa Properties, Tuesday’s announcement is good news for the industry, especially home builders.
“This gives us clarity. It’s been so ambiguous the last year and [homeowners] want to know — what’s the amount of tax they’re going to have to pay?” said Openshaw.
Simpson says the ripple effect of the housing tax breaks — which also includes a B.C. Seniors Home Renovation Tax Credit of up to $1,000 annually — will stimulate job creation not only on construction sites, but in secondary industries such as manufacturing.
The seniors’ renovation tax credit will cost the government about $27 million annually.
Not all was good news Tuesday for Simpson, with nothing in the budget to relieve the negative impact that the HST has had on home renovations.
“Homeowners are still sitting on their wallets and delaying their decisions to renovate their homes and waiting for the HST to disappear,” he said.