If your thinking about purchasing a brand new home, (or one that is substantially renovated click here for more info on renovated homes ) You are also going to want to think about GST!
What is GST?
The goods and services tax (GST) is a value added tax introduced in Canada on January 1, 1991, by the government of Prime Minister Brian Mulroney. The GST replaced a previous hidden 13.5% manufacturers’ sales tax (MST);
What you need to know about GST
The GST tax rate for real estate in B.C. is 5% and due at the time of completion. Usually GST can be built in with mortgage, so you won’t necessarily need the cash at completion. The GST only applies to the sale of brand new properties but even then, there are some rebates.
If your new home is going to be your permanent residence (for other qualifing info click here) and the home is under $350,000, the rebate is 36% of the GST (5%) with a maximum rebate of $6,300.
Homes between $350,00 and $450,000 receive partial rebates in a significantly lower amount and homes over $450,000 receive no GST New Home Rebate.
If you are planning to rent out your new home, you may be eligible for the GST New Residential Rental Rebate. Just like the above rebates, the GST NRR Rebate only applies to new homes up to $350,000. For more details on the GST NRR Rebate, click here.
How do I figure out my GST?
As you now understand, the potential amount of tax to be paid on new property purchased in BC can vary greatly. Fortunately, the British Columbia Real Estate Association created a straightforward and easy to use tax calculator. It will help determine all relevant payable taxes on your property. Please note that this calculator should not be considered a substitute for professional accounting or legal advice.
CLICK HERE FOR THE BCREA TAX CALCULATOR.
Or simply contact me for help – Just click here