The British Columbia Government has released important details today with respect to the transitional implementation of the HST with resepct to new Real Estate construction. The tax will not just occur on July 1, 2010 but will be phased in. This is an important consideration for builders and buyers.
To help homebuyers and builders transition to the HST, transitional rules would be provided for new housing transactions that straddle July 1, 2010. The proposed transitional rules would be similar to the transitional rules that applied when the GST was introduced. These rules, including builder reporting and disclosure requirements, would be administered by the CRA.
Generally, sales of newly constructed or substantially renovated homes would be grandparented where the written agreements of purchase and sale are entered into on or before November 18, 20096 and both ownership and possession of the homes are transferred under the agreement after June 2010. These sales would be subject to the federal component of the HST but would not be subject to the provincial component of the HST.
Grandparenting generally would apply to sales of newly constructed or substantially renovated single-unit homes7 to individuals. Also, grandparenting generally would apply to sales of residential condominiums to all persons including individuals.
Sales of these grandparented homes would not be eligible for the B.C. new housing rebate or new rental housing rebate.
Grandparenting would not apply to traditional apartment buildings, duplexes, mobile homes, floating homes and homes built by owners for their personal use where construction straddles July 1, 2010, as the general transitional rules would apply differently to these homes. However, these homes may qualify for one or more of the following proposed rebates: the PST transitional new housing rebate, B.C. new housing rebate, B.C. new rental housing rebate in addition to the GST new housing rebate and the GST new residential rental property rebate that may be available.
9 On a temporary basis, large businesses (those with annual taxable - including zero-rated - sales in excess of $10 million) and financial institutions would not be able to claim ITCs in respect of the B.C. component of the HST on certain inputs used in their taxable activities. After the first five years of the HST implementation, ITCs for these inputs would be phased in over a three-year period. Items for which ITCs would be restricted are listed at www.gov.bc.ca/hst.
Traditional apartment buildings, duplexes, mobile homes and floating homes would be subject to the general application of tax (see above) such that the proposed HST would apply to the sale of these housing types if both ownership and possession are transferred to a purchaser on or after July 1, 2010. However, if under a written agreement of purchase and sale, either possession or ownership is transferred prior to July 1, 2010, then the provincial component of the HST would not apply.
Builders who are registrants for GST/HST purposes would be able to recover the provincial component of the HST paid on most purchases through input tax credits (ITCs), as under the GST, with limited exceptions.9 However, builders of grandparented homes generally would be required to pay an amount-a transitional tax adjustment-based on the extent of the home construction or substantial renovation completed as of July 1, 2010. The transitional tax adjustment for grandparented homes is intended to approximate the amount of PST, approximately two per cent, which would have been embedded in the price of the home, on average, under the current PST regime. Builders would also be required to meet certain reporting and disclosure requirements for grandparented homes.
The calculation of the transitional tax adjustment is described below.
9 On a temporary basis, large businesses (those with annual taxable - including zero-rated - sales in excess of $10 million) and financial institutions would not be able to claim ITCs in respect of the B.C. component of the HST on certain inputs used in their taxable activities. After the first five years of the HST implementation, ITCs for these inputs would be phased in over a three-year period. Items for which ITCs would be restricted are listed at www.gov.bc.ca/hst.
Transitional Tax Adjustment - Single-Unit Homes
For grandparented sales of newly constructed or substantially renovated single-unit homes, including detached, semi-detached and attached homes, the builder generally would be required to pay a transitional tax adjustment where the home is completed in full or in part after June 2010.
The transitional tax adjustment for these homes would be calculated on the total consideration of the home, as established for GST purposes, based on the degree of construction or substantial renovation completed as of July 1, 2010, as follows:
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Degree of completion of construction or substantial renovation on July 1, 2010
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Transitional tax adjustment rate
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< 10 per cent
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2.0 per cent
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10 per cent ≤ and < 25 per cent
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1.5 per cent
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25 per cent ≤ and < 50 per cent
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1.0 per cent
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50 per cent ≤ and < 75 per cent
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0.5 per cent
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75 per cent ≤ and < 90 per cent
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0.2 per cent
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≥ 90 per cent
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0.0 per cent
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your Coquitlam, Port Coquitlam, Pitt Meadows, Maple Ridge and surrounding areas Realtor
Situated on the shores of the mighty Fraser River and nestled against the Coast Mountains, Maple Ridge is a mecca of adventure for the outdoor enthusiast. Located 45 kilometers east of Vancouver, it is a progressive community well-known for its beautiful countryside and spectacular scenery. It is a community of urban sophistication that retains a sense of rural charm.
This morning, grudgingly in order to appease my 10 year old daughter, I fell out of bed at around 5:30 AM in order that I could drive her to the official Vancouver 2010 Olympic Torch run through Maple Ridge, British Columbia real estate on its way to Vancouver where it will arrive in the 4 days time after winding through Greater Vancouver.
on December 9 before completing its journey on December 18th, the day the train passes through Maple Ridge.
Canadian blues-rock trio Wide Mouth Mason.
ect it to be, and proceed to the lawyers office with the cheque.