Effective July 1, 2010, British Columbia will be combining the GST and PST taxes into one Harmonized Sales Tax (HST). The implementation of the HST will not change the taxation on mortgage insurance premiums. However, the HST will be applicable on new construction homes and may be eligible for the HST new housing rebate.

• In BC, the HST rate on new construction housing (i.e. both house and land) will be 12% (GST of 5% and PST of 7%) 
• There will be a partial rebate of the PST portion of the HST in an amount equal to 5% of the purchase price up to a maximum rebate of $26,250. The rebate would eliminate any tax increase on new housing sold for a purchase price of up to $525,000. There would be no phase out of this rebate, such that homes priced above $525,000 would qualify for the maximum rebate amount of $26,250.
• New home buyers may be eligible for the federal GST new housing rebate, which generally equals 36% of the tax paid on the first $350,000 of the purchase price. The amount of the GST rebate is phased out on a straight-line basis for homes priced between $350,000 and less than $450,000.

Examples of the applicable taxes are as follows:

Note: Lender Financing of HST - For qualification and submission purposes, the lender is not required to deduct the rebate from the purchase price.  The lender may finance and submit to the insurer, the total purchase price as reflected on the purchase and sale agreement that would include the HST for a total Purchase Price.

Article courtesy of Christine Chien, mortgage broker with The Mortgage Group www.BestRateBestMortgage.com

The enclosed information while deemed to be correct is not guaranteed.

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