HST change helps sales
New tax regulations lauded as buyers sign on the dotted line over the weekend
Some B. C. developers are already benefiting from harmonized sales tax changes introduced by Finance Minister Kevin Falcon on Friday.
At least one B. C. development has already benefited from the harmonized sales tax changes introduced by Finance Minister Kevin Falcon on Friday.
At Qualicum Landing, a waterfront, luxury- home development on Vancouver Island, three deals were made over the weekend, said Lynn Robison, the sales manager.
“We had three people came off the fence this weekend,” Robison said Monday. Two of the deals were for vacation homes specifically, while all three buyers are from Alberta.
The government raised the HST rebate threshold to $ 850,000 from $ 525,000 for new homes, meaning purchasers of new homes will be eligible for a rebate of up to $ 42,500, as of April 1 this year. The threshold will also apply to recreational homes outside the Lower Mainland and the capital region, which were previously not eligible for a rebate. The HST does not apply to resale housing.
If construction begins after April 1, 2013, the reinstated PST will apply. The government calculates this will cause about two per cent of PST to be embedded in the price of a new home.
For houses under construction before April 1, 2013, but with ownership after that date, the government will charge a transitional tax of two per cent and builders will get temporary housing transition rebates to offset PST on materials to help prevent double- taxation on homebuyers, the government announced.
The move is meant to smooth the transition from the HST back to the provincial sales tax. The five- per- cent federal portion of the HST will not change nor will any federal rebate programs.
“It’s a huge relief for us, because it was a holding pattern and everybody was paralyzed,” Robison said. “You could just hear a huge sigh of relief from developers across the province and from buyers. Nobody wants to be the last one paying the tax.”
Bob Rennie, owner of Rennie Marketing Systems, which is selling the Olympic Village condominium development, now called the Village on False Creek, said they didn’t see a surge of buyers over the weekend, but that the higher rebate threshold is responsible for lots of “positive talk” among buyers in the $ 600,000 to $ 900,000 price range.
He said that for developers contemplating new projects, or in the beginning stages, more clarity on the rules is still needed. “We need to find a clear way to explain to the consumer the difference between the tax rules in April 2012 and in April 2013,” he said, adding that things are better than they were a week ago. “We’re happy.”
Maureen Enser, executive director at the Urban Development Institute, said it’s still a bit too early to have heard of any new projects planned as a result of the changes, but she said she assumes that many projects that were on hold will now be built. “We do know that some developers were holding off, only because you can’t enter into a contract if you don’t know what taxes you’re going to pay,” Enser said.
In December, there were about 2,000 units on hold, representing 8,000 jobs, she said.
“I think those planned projects would likely proceed with great haste now,” Enser said. “Now that they know what the rules are going to be, I think that was the signal they were waiting for.”
She said the new threshold for the rebate will help families.
“Most family housing in the Lower Mainland is between $ 525,000 and $ 850,000, so it is really going to help families looking for a new home and it is going to level the playing field between new homes and resale homes,” Enser said.
Peter Simpson, president and chief executive officer of the Greater Vancouver Home Builders Association, said although his members are still trying to figure out exactly what the new rules mean, the changes are being widely applauded. “They’re happy with the certainty now, but they’re still trying to get their heads around what this means,” Simpson said.
He’s hopeful that today’s provincial budget will hold some equally welcome good news for home renovations.
“I think [ Falcon] saved some goodies for Tuesday so people don’t remain sitting on their wallets or worse, participating in the underground economy,” Simpson said. “Now, people will fix their roof if it is leaking, but they’ll put the $ 100,000 renovation on hold.”