The New BC HST Will See Decreased Housing Affordability, Increased Rents, A BC Construction Industry Crash and Fewer First Time Homebuyers

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B.C. and Greater Vancouver Homebuyers Will See Cost of New Home Purchases and Home Ownership Skyrocket by Thousands of Dollars Thanks to the New British Columbia HST Tax

According to artiles published from the Vancouver Sun and Province newspapers, British Columbians are in for a crisis following the B.C. Government’s announcement of the harmonization of the PST and GST taxes into the single 12% HST tax. What some British Columbians don’t understand quite yet, is why the government failed to notify the public and taxpayers earlier regarding their plans for the B.C. Harmonized Sales Tax and even then, why they didn’t seek input from taxpayers, various industries including the construction and home building industries in addition to other organizations and businesses. One thing is for certain: B.C. and Greater Vancouver homebuyers are the BIGGEST LOSERS under the controversial B.C. HST or harmonized sales tax. Starting July 1, 2010, the Harmonized Sales Tax of British Columbia will come into effect, and both new and resale Vancouver and BC home purchasers will be out of tens of thousands of dollars when purchasing their biggest single asset in their lifetime.



Also, visit our updated BC HST Price Chart that shows the increased cost of purchasing a new home in Vancouver and British Columbia after the July 1st, 2010 HST implementation.

The Most Expensive Real Estate Markets in Canada Will Become More Unaffordable

B.C. real estate is the most expensive in all of Canada. And when you factor in the property markets in the Okanagan, Vancouver Island/Victoria and Greater Vancouver/Lower Mainland are the hottest and most expensive in the country, British Columbia homebuyers will suffer the most from this harmonized sales tax of 12% HST. BC residents will end up paying taxes on land, the house and other professional services in any B.C. and Greater Vancouver real estate transactio through the controversial BC HST tax implementation in 2010. Firstly, the 12% Harmonized Sales Tax will be applied to any new B.C. home or property. Compared to the current GST/PST system, new home buyers in Greater Vancouver and British Columbia only need to pay the 5% GST on any new real estate purchase (and even then, they get a significant rebate up to $450,000 purchase price) and PST is NOT applied to any new home purchase in the province. Under the new system with the new BC HST Harmonized Sales Tax on real estate, new homes will have the extra 7% (equivalent to the BC PST of 7%) applied to every new property transaction. BC already has one of the highest Property Transfer Taxes in the entire country too, with some partial PTT exemptions only for first time homebuyers and only up to a certain price point. Currently, the Property Transfer Tax in BC is calculated as 1% on the first $200,000 and 2% on the remaining amount, which can add a significant amount (thousands) to any new or resale BC or Vancouver home purchase. It has been calculated that a new home costing $800,000 in BC will be subject to the 12% HST tax with the maximum partial HST rebate at only $20,000. The difference between total purchase price of the new home in BC (not including increase costs in closing fees) is approximately $56,000.

The HST Input Tax Credit and What It Means to B.C. Home Builders

The new BC Harmonized Sales Tax system will have profound effects on the construction and BC home building industries, allowing homebuilders and developers to pass on the PST for building materials (about 2% in total) which can now be embedded into the price of a new British Columbia or Greater Vancouver home on the market. Again, the biggest losers are the BC and Vancouver homebuyers who will have to shell out this different as most homebuilders will be looking out for their bottom line and saving the 2% wherever possible. Under the new BC HST input tax credit regulations, home builders in Vancouver and the province can claim money back as an HST input tax credit, that would reduce their tax bill by about $8,000 if they pass this cost onto the end homebuyer of the new home. This is most likely the fact of life that new BC homebuyers have to face if they want to buy, design, construct or invest in a new property starting July 1st, 2010. Compared to the Fraser Valley real estate market, a new detached home in that region goes for an average of $506,000 resulting in an added $15,500 in taxes due to the B.C. Harmonized Sales Tax, and that is even after the HST rebate maximum.

The HST Will Influence Other Transaction Services

Other profound influences of the British Columbia Harmonized Sales Tax on other real estate transaction services, goods, and fees include realtor’s commissions that will cost a lot more and will rise from the 5% GST only to the 12% HST. The average real estate agent commission on a $800,000 home in B.C. is roughly $40,000, so the increase in 7% in taxes will add thousands to this fee for BC home sellers. In addition, if you take into account other real estate professional fees such as a notary public, legal fees, surveyor, appraiser or home inspector, all of which are subject to the 12% Harmonized Sales Tax in BC, this will certainly add hundreds more dollars onto your cash out in any BC real estate transaction, whether it is a new property or a resale property. Other transaction services affected by the B.C. 12% HST include such things as residual costs that include renovations, maintenance, green energy retrofits etc which are all subject to the twelve per cent harmonized sales tax come July 2010. Many home builders and renovators have already expressed their anger towards this new B.C. HST and say that they will build flat out until July 1, 2010. After this date, analysts predict a significant drop in sales of new B.C. and Greater Vancouver homes and according to the Greater Vancouver Home Builders’ Association, the introduction of the BC Harmonized Sales Tax will become a huge barrier to affordability in the housing markets in B.C. The higher costs of housing will have a profound influence on the middle class who are on the verge of upgrading their homes for their families or first time homebuyers who seek home ownership. The multi-millionaires will pay the tax, and will not really care, as they have the money. Some analysts also say that the $400,000 threshold for the BC HST rebate is way too low, especially in the Lower Mainland and Greater Vancouver real estate markets. The more realistic HST threshold should be around $750,000. The B.C. Real Estate Association even goes ahead and indicates that the BC Government should actually phase out the Property Transfer Tax (PTT) to help affordability in real estate. With the outlook that interest rates are certainly rising later in the year into 2010, the B.C. housing market is due for a fallout once the BC Harmonized Sales Tax takes into effect. Some analysts also predict that the new BC housing market will peak sometime in May or June 2010 as new homebuyers seeking new homes in B.C. and Greater Vancouver will likely make their purchase before the 12% HST tax burden hits in July … and with the BC Government and Bank of Canada likely to keep their promise at keeping their prime lending rate at 0.25% (and the major banks keeping their prime rates at 2.25%) until June 30, 2010, there really will be a rush in new home construction and purchases during that time period. Basically, the new B.C. HST is a tax that will be passed through the businesses to the consumers, so in the end, British Columbia homebuyers will be the hardest hit.

Real Estate Online Tools Through My Home Planner by Genworth PLUS Top 10 Home Buying Mistakes, Long Term Real Estate Questions, New Versus Resale

Real Estate Online Tools Help Make Sense of the Canadian Homeownership Process

While they are often cause for celebration, planning a Canadian home purchase and a move are often cited as some of life’s most stressful life experiences and events. Many other life moments have built in backup to help you along the way such as weddings have planners, and vacations offer itineraries and tour guides for you. It only makes sense, that something this important such as a Canada home purchase should come with planners and checklists to keep you organized and in control every step of the way. My Home Planner, found at www.myhomeplanner.ca is a new and useful online tool by Genworth Financial Canada that helps make sense of the homebuying process in Canada real estate markets. It’s like having a constant companion on your journey to homeownership in Canada property – one with a great memory and a knack for details. An interactive calendar show you your roadmap at a glance and serves as an official countdown to when you close the Canadian real estate property deal and move in. Canadian My Home Planner does the memory work for you – keeping track of tasks and decisions that need to be handled ont eh way to your new Canadian home purchase. It even generates email notifications to remind you of key details so that you can stay focused on the big picture of Canadian home purchase. Why go it alone? Tools like My Home Planner Canada from Genworth Financial Canada can help you understand what Canadian homeownership looks like, plan your journey and close the deal knowing that you haven’t missed a single step along the way. Other free resources from Genworth Financial Canada for Canadian homeownership and home purchase includes a personalization feature that populates your Home Planner calendar with both standard and customized homebuying tasks leading up tot eh closing of your new home, the ability to save your own Home Planner Canada to your desktop or laptop, and print it for easy reference. In addition, My Home Planner Canada will provide interactive tools like ‘What Can I Afford’ and ‘Rent vs Buy’ calculators and a library of articles from industry experts, filled with tips and advice about the Canadian home buying process.

The Top 10 Home Buying Mistakes and How To Avoid Them

A useful article from the Canadian Real Estate Magazine outlines the top ten problems and mistakes that Canada homebuyers make when deciding on a home purchase. #10 – Making an offer prematurely is one of the top 10 home buying mistakes in Canada where homebuyers decide on a property without looking at other options or enough other properties. #9 – Homebuyers Using the Wrong Realtor – as many realtors entered into the Canadian real estate marketplace to make the quick buck (not because they really enjoyed being agents), the tougher times have allowed Canadian home buyers to select the best realtors for the job at hand. A challenging market poises more challenges, and an experienced local realtor is definitely important in your purchase decision. #8 – Not reviewing the purchase contract closely can become a top 10 home buying mistake in Canadian real estate as there are many clauses, inclusions and exclusions in every purchase contract. And since many first time Canadian home buyers purchase condominiums, these agreements are usually drafted by builder lawyers. #7 – Scrimping on the inspection process can cause you a lot more money and headaches in the future and thus is a top 10 homebuying mistake in Canada as it only costs $500 to thoroughly inspect a full single family home before you write the final cheque and lift conditions on your offer to purchase. #6 – Choosing the wrong location is a Top 10 Home Buying Mistake that can mitigated – as most first time homebuyers tend to stay in their homes for five to seven years, but you need to look at your eventual resale value. #5 – Not knowing your mortgage options can cause you to spend a lot more money on your mortgage payments both short term and long term and thus is a top ten home buying mistake that many first time hombuyers in Canada fall into. Get mortgage brokers to talk to banks on behalf of your application to help you along your way. #4 Not getting pre-approved for a mortgage is another top Canadian home buying mistake as a pre approved mortgage allows you to understand how much banks are willing to help finance your new home purchase. #3 – Settling on a property is the opposite of over buying and afflicts many Canadian homebuyers and thus, you need to make a more informed choice. #2 – Emotion over reason is a common Top 10 Canada Home Buying mistake as the emotional attachment that you get can outweigh any reasonable reason, your budget and many other critical factors in selecting a new home. In addition, cosmetics and furnished homes for sale will not look the same with your furniture and features integrated into the home. #1 Top 10 Home Buying Mistake in Canada is overbuying, so make sure that you can afford the home that you put an offer on.

12 Top Questions for Long Term Real Estate Potential

When it comes to capital appreciation and increase in rents over the long-term, the top 12 long term real estate potential questions for homebuyers and investors include the following questions that you must ask yourself and other professionals before purchasing a new home in Canada. Will any short term challenges (such as negative publicity, layoffs) disappear? Is the area attractive to Baby Boomers? Is there a major transportation improvement occurring nearby? Is the neighbourhood located in an area of renewal or gentrification? Is the region’s Economic Development Office helpful and proactive? Has the local and provincial political leadership created a growth atmosphere? The final six top 12 questions for long term Canadian real estate potential include: Will the property value benefit from a major redevelopment nearby? Is the Canadian real estate booming in the surrounding region more than where you’re looking? Does the area have more than one major employer? Is the area creating jobs faster than the provincial average? Is the area’s population growing faster than the rate of the provincial average is? Is the area’s average income increasing faster than the provincial average is? From REIN.

Buying New Versus Resale Real Estate in Canada – Which One Is Better?

There has always been an ongoing debate amongst both homebuyers and investors on whether to purchase new property or to buy resale real estate. One of the common questions firs time homebuyers have is whether to buy a new or previously owned home, typically called a resale property. Much of your decision, according to CMHC as well as the Canadian Real Estate Magazine hinges on your budget, the area you want to live in and other specific details – but there are some characteristics that all homebuyers should be aware of when the new versus resale real estate debate goes on. So in this real estate debate of new versus resale, a new home will have the following disadvantages over re-sale property (in no particular order): extra costs (like upgrades) and taxes (such as GST, HST etc.). However, the advantages of new property versus resale real estate is that the newer builds have neighbourhood amenities, new home warranty program to protect your investment in the short to medium term, builder warranty for your protection, low maintenance costs, up to date on the latest building standards and modern design/layouts. From the resale home perspective, there is no GST or HST, landscaping and fencing are already usually established, you can see exactly what you are buying before you make your final decision but there may be possible redecorating and renovations required for an older home.