The new Harmonized Sales Tax comes into effect on July 1, 2010.  There are some public misconceptions about this tax, so here is some information to help you sort through what you hear.

Fact:  The HST applies to NEW homes being sold for the first time and to homes that have been substantially renovated (90% or more).  The purchase agreement has to be signed after November 18, 2009, with possession dated on or after July 1, 2010.

Fact: After July 1, 2010, a new $800,000 home in White Rock will cost $11,510 more than it would have cost on June 30..  The 5 % GST has always applied to new homes.  The provincial HST rebate of $26,250 is available for the purchase of all new homes worth more than $525,000.  For more info on the HST calculation, go to http://hst.blog.gov.bc.ca.

Fact:  HST will apply to all fees for professional services in the purchase or sale of a new or resale home.  As GST applies to these currently, all these services will cost 7 % more.

Fact:  Home insurance is exempt from HST.

Fact:  Home heating costs will see no impact from HST.

Fact: Furniture and electronics will see no tax change.

It’s important for the public to know that this tax increase could have been worse, if it hadn’t been for REALTORS® and other representatives in the housing industry, having sucessfully lobbied to mitigate the impact of the HST – getting the threshold increased to $525,000 from $400,000 and the HST rebate raised to $26,500 from $20,000.

The good news is that many homes, especially townhouses and apartments, in the Fraser Valley, and particularly in Abbotsford, sell for less than $525,000 – meaning that these homes will be exempt from the HST.