Are you in favour of extinguishing the HST (Harmonized Sales Tax) and reinstating the PST (Provincial Sales Tax) in conjunction with the GST (Goods and Services Tax)? Yes or No?
* The first point to note is the format of the question.
* If you vote YES – then you do not want the tax.
* If you vote NO – then you agree with the tax and its proposed changes.
Now that the question you will be voting on is clear, I would like to bring forward some of my views on the impact this tax has on the real estate market and the economy of B.C.
Prior to the tax coming into effect on July 1, 2010 most transactions relating to real estate were not taxable at the provincial sales tax level. Many believe that is still the case until you take a closer look. Even if you are not buying or selling a property, you are still affected by this tax if you own property.
IF YOU OWN YOUR HOME:
Only three examples from a long list:
When you own your home, you want to keep it in good condition. Prior to HST many trades people that may work on your home did not charge PST on the labour portion of their work. With HST you are now charged this tax. This has added 7% to your maintenance costs.
You wish to do a refinancing to buy another property, reduce your interest cost or debt consolidation. Your legal fees, the land appraisal, and other associated services are now charged an additional 7% tax. This amounts to a few hundred dollars in many cases.
Many building supplies that were excluded from PST such as energy efficient products or agricultural products are now charged an additional 7% tax. You wish to upgrade the insulation in your home for example; you are now charged an additional 7% tax to be energy efficient. That seems pretty smart?
YOU WISH TO PURCHASE A PROPERTY OR SELL YOUR EXISTING PROPERTY:
Prior to July 1, 2010 most services related to this were not subject to the PST. The GST is another topic, but we do not have the opportunity to vote on this tax. How are you affected?
Most transactions require the services of a lawyer or notary. You are charged HST on their services.
Most transactions require a land appraisal. You are charged HST on this.
Most transactions engage the services of a Real Estate Agent; you are charged HST on this.
You use the services of a mover or rent a truck to move. You pay HST
Another point to consider is that most moves involve two transactions – You sell so you can buy. The HST then has double the impact.
YOU WISH TO PURCHASE A NEW HOME – or a building lot to build your dream home:
This particular real estate transaction has the greatest cloud of confusion hanging over it! Most buyers and most realtors do not fully understand this particular unique transaction.
One of the largest contributors to the B.C. economy is the new housing business. Everything from trades people, the lumber yards, the furniture stores to the garden shop are dependent on the new home market. Add to this the fact, that if the supply of new homes is reduced then the supply of used homes is also reduced. This has the net effect of supply and demand driving housing prices up.
Further to this, the market has a supply of new homes available for sale by good builders that, in many cases, are being offered at prices equal to or below the prices of similar used houses. Why are purchasers not buying new houses? Why are some buyers paying more for a used house than a new house? They are confused in many cases about the impact of the HST. If confused stay with what you know, buy used even if you pay more!
If you didn’t know that new is less than used – call me and I will show you proof. Prior to July 1, 2010 land was not subject to the PST tax. This is no longer the case.
Before I add to the confusion however, you do get some tax breaks. A system of tax credits or refunds up to a maximum of $26,250 to be applied to your tax bill is available. This helps soften the tax blow to some degree. You do not pay the full tax at the full rate on a New Home to be clear, but you do pay some tax depending on the value of the new home. [subject to some conditions] See what I mean about confusion!
Now for a simple overview of the impact that the HST has on the New Housing Industry:
* Prior to HST the land component {about 50% of a new home cost} was exempt from taxes. Not now.
* Prior to HST about 50% of the cost of the home construction was exempt from taxes.
* About 50% of a homes cost is labour or materials such as insulation and energy efficient items that are totally tax exempt. This is not the case with HST.
* Include the services that a purchaser of a home will need, as with any home purchase
New or Used Are Also Taxable:
With new housing starts down, mainly due to the “confusion” and the production of building lots down, do you suppose this is affecting our economy? One reason we are seeing such high housing inflation in some pockets of the Fraser Valley is due to the reduced supply of New Homes. Further to this a huge employer is the new home industry. Watch the unemployment rates fall, as the housing/construction sector becomes more robust.
Does the HST affect new homes? You bet! Check out the government's own web site for an example of the increased taxes on a new home as compared to pre-HST times. In most cases the builders are absorbing this tax increase reducing the supply of new homes to the consumer. SOME GREAT BUYS HOWEVER!
See the link http://www.hstinbc.ca/buying_goods/buying_a_home/
In case you are having some doubts about what my opinion is, let me make another comment. The B.C. Government is making the claim that by 2014 [about two years from now] I will be saving about $120 per year on my HST.
After reading my comments, do you think I should wait two years for the $120, or should I vote YES – which really means NO!
If you have any further questions please feel free to contact me – call 604-910- LACE(5223).
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