The 2% BC Transition Tax on new homes is coming April 1, 2013

(March 04, 2013 , posted in Buying Your Home)

If you plan to buy a new home in the next few months or over the next two years, then you need to know about the 2% BC Transition Tax.

The 2% BC Transition Tax applies to the full price of a new home, which is 10% of more complete, where ownership or possession is on or after April 1, 2013, but before April 1, 2015. The 5% GST also applies to the full price of a new home, where ownership or possession is on or after April 1, 2013. The 2% BC Transition Tax will end on March 31, 2015.

With the end of the HST and the return to the PST/GST system, the BC government chose to introduce the 2% BC Transition Tax as a way, in their words, “to ensure the equitable application of tax for purchasers of new residential homes currently under the HST system” and after April 1, 2013 when the province returns to GST on new residential homes. The government also wishes to replace some of the revenue lost through the return to the PST.

BC’s portion of the HST will no longer apply to newly built homes where construction begins on or after April 1, 2013. Builders will once again pay 7% PST on their building materials (construction inputs). The provincial government asserts that on average, about 2% of the home’s final price is embedded PST that builders pay on their building materials.

The Transition Tax rebate for builders (sellers) recognizes that the builder will not be able to claim input tax credits on the PST paid on building materials acquired after March 31, 2013. The rebate is available where both of the following conditions are met:

  • The 2% BC Transition Tax applies to the sale of new housing; and
  • Construction or substantial renovation is at least 10%, but not more than 90%, complete before April 1, 2013.
The Transition Tax rebate for sellers of new housing will be calculated on the degree of completion of the housing as of April 1, 2013:





The 2% BC Transition Tax does NOT apply to:
  • the sale of vacant land, whether the GST would apply or not;
  • the sale of new commercial units; or
  • REALTOR® commissions.
I would advise you to ask your tax advisor for specific questions that you may have on this change.

Source: BCREA PST Transition Rules website at www.bcrea.bc.ca/government-relations/pst-transition-rules

As a Vancouver real estate consultant, my business grows by building strong client focussed relationships. I would welcome the opportunity to answer any questions about the real estate market.

If you would like to find out how much your home is worth in today's market, to discuss listing your home or buying a new home, please contact me on (604) 781-5692 or via email - tim@timwray.ca

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