The HST has been looming large in the minds of prospective homebuyers. A recent IPSOS Reid survey indicated 40 per cent of B.C. Home Buyers believe the HST will impact their home buying plans. The question is, how big of an impact will it have?
The jury is still out on exactly how the HST will affect the overall housing market. However under the current proposal a homebuyer purchasing a used or resale home will see only a marginal increase in their actual costs.
According to Tony Spagunolo, “The average buyer purchasing a used home will see an increase of maybe $100 if the HST is implemented in the current form.” Spagunolo owns, The Spagunolo Group of Real Estate Law firms, and specializes in Real Estate conveyance.
When you break down the numbers it becomes apparent Tony is right.
Buyers only pay GST on new real estate. Therefore a resale property should not be subject to HST. Legal fees already include GST and PST therefore will have no change.
The only additional cost will be on home appraisals and inspections. Home appraisers and inspectors currently only charge GST. In the Okangan an appraisal can cost about $300 while an inspection is around $175. The total GST on both is currently $23.75. Once the new rules take effect July 1st, 2010 the total tax will increase to $57.00 which is an increase of only $33.25.
Who will the HST hurt the most?
Sellers will actually pay quite a bit more HST than buyers. Sellers pay Real Estate commissions which are subject to GST. Considering the average $400,000 sale generates a commission of around $16,000 the HST will add an additional $1,120 in tax. Not a small sum, but probably not enough to prevent a sale either.
Perhaps the single group most likely to feel the pinch from the HST are homebuilders. In particular builders who have a building completing after July 1/2010 will be the most impacted. There is a transitional tax planned for these buyers, but rest assured the builders, or more likely buyers are going to absorb some of the new tax.
It seems the provincial government is convinced more tax is the cure for what ails us. Whether this is the case still remains to be seen. At least homebuyers purchasing re-sale real estate can breathe a collective sigh of relief since the increased cost of the HST will be less than a less than a pizza and a six pack of beer
-Scott Peckford – Mortgage Architects
More Kelowna Real Estate News at Vatage West Realty.com
http://www.vantagewestrealty.com
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