Blog > What is GST on New Home Sales?
In British Columbia (BC), the Goods and Services Tax (GST) is applied to the purchase price of new build homes. Here's what you need to know about the GST on new build homes in BC:
1. GST on New Build Homes: When you purchase a new construction home in BC, you are required to pay the GST on the purchase price. The GST rate is currently set at 5% of the purchase price.
2. New Housing Rebate: To provide some relief from the GST on new build homes, the federal government offers a New Housing Rebate. This rebate is designed to offset a portion of the GST paid on the purchase of a new construction home.
The New Housing Rebate is available to individuals who are purchasing a primary residence or a rental property. The rebate amount is calculated based on the purchase price of the property, up to a certain maximum. The rebate applies to properties with a purchase price of up to $450,000.
For properties with a purchase price above $450,000, the rebate is gradually phased out, and no rebate is available for properties with a purchase price of $500,000 or more.
3. Transition Tax: If you are purchasing a property that is considered substantially renovated, you might be subject to a Transitional Tax. This tax applies when a home is significantly altered or rebuilt to the extent that it's considered a new construction. The Transitional Tax is meant to ensure that substantially renovated homes are subject to the same tax treatment as new construction homes.
4. Obtaining the Rebate: To claim the New Housing Rebate, you'll need to complete the applicable forms provided by the Canada Revenue Agency (CRA). These forms are typically provided by your developer or builder. It's important to follow the instructions on the forms carefully and provide all required documentation to support your rebate claim.
5. Other Considerations: Keep in mind that the GST is just one component of the overall costs associated with buying a new build home. Other costs, such as property transfer tax, legal fees, and potential strata fees, should also be factored into your budget.
Before purchasing a new construction home in BC, it's a good idea to consult with a financial advisor, tax professional, or real estate expert. They can provide you with guidance on how the GST and potential rebates will impact your specific situation and help you make informed financial decisions. Please reach out to Sasha Hahn your North Vancouver real estate expert for a complementary consultation.
