Langley Real Estate

 Generally, a buyer must pay HST on new or substantially renovated residential housing. The HST is 12% and applies to the entire purchase price of the home; however, several HST rebates may be available.  The HST is made up of a 5% federal component (formerly, the GST) and a 7% provincial component (formerly the PST).

Rebate on Federal Portion

For homes costing $350,000 or less, you will receive a rebate of 36% of the GST paid, to a maximum of $6,300. That means you pay approximately 3.2% GST (not 5%) on the purchase price.

For example, if the purchase price of a new home is $300,000, the 5% GST equals $15,000. The buyer then receives a 36 per cent rebate of $5,400 ($15,000 x 36%) which is subtracted from $15,000 to equal a total net GST payment of $9,600. The effective GST rate on this purchase is only 3.2%.

The federal government has also allowed a rebate for homes purchased for between $350,000 and $450,000.  The rebate is gradually reduced as the home price increases, and is calculated by using the following formula:

$6,300 X ($450,000 less purchase price)/ $100,000

For example, if the value of the home is $400,000:

$6,300 X ($450,000 – $400,000)/ $100,000

The rebate would equal $3,150.  The GST payable would be $20,000 ($400,000 x 5%) less the rebate of $3,150, for a net total payment of $16,850.

Rebate on Provincial Portion

The rebate on the provincial portion of the HST is calculated as follows:

• 71.43% of the provincial portion of the HST to a max rebate of $26,250 regardless of the purchase price.  This means that the maximum rebate is attained on a home purchases over $525,000

For Example, if the purchase price of a new home is $300,000, the 7% PST component equals $21,000 with a rebate of $15,000 ($21,000 x 71.43%) for a net PST of $6,000.  If the purchase price is $600,000, the 7% PST component equals $42,000 minus the maximum rebate of $26,250, for a net PST of $15,750.