The Effects of HST on BC Real Estate?

I get asked a lot these days what HST (harmonized sales tax of 12% vs 5% GST) is going to do to Real Estate Sales and Values in Greater Vancouver.

The general consensus is that is is going to be very bad, and everyone should rush to buy Real Estate before July 1st 2010.

The Fact is that HST is only going to apply to BRAND NEW Real Estate or completely renovated Real Estate.

So if you are planning on Buying a brand new custom home or a new condo do it before July 1st! (ie a $2 million dollar home will cost you $140,000 more in taxes or a $650,000 apartment will cost you $45,500 more!)

Also keep in mind there will be a HST exemption for property under $525,000 for up to $26,250, so if your budget is under $525,000, don't sweat the HST, especially if you are a first time home buyer as you can claim full exemption on HST & PPT (1% of 1st $200K & 2% of the remainder) for purchases under $425,000.

We all have to now pay HST on services such as legal fees and Realtor commissions, but this change will be nominal.

If you are buying resale property, which makes up almost all of the 3,500 or so sales a month in Vancouver, you have no need to worry or rush in fact you may want to wait until after July 1st when developers will be adjusting their sale prices down which may have a domino effect and bring market prices down by 2-5%. But don't wait too long, especially if you have a good interest rate locked in or you find a property you love because it will probably be gone and with today's market conditions you can negotiate a purchase price of 5-10% off asking price, essentially hedging you against any market corrections later in the summer.

Overall, I believe the effects will be minimal to consumers, prices will rise slowly this year with inflation, and developers will be forced to lose profits and come up with creative marketing and financing ideas to remain competitive with the resale market after HST is applied on July 1st, 2010.

If you have any questions regarding this topic or any Real Estate inquiries, please do not hesitate to call, text, tweet, message, or email me, and I'd love to chat about it.