HST housing transition rules out Friday
VICTORIA – B.C. and Ottawa have worked out transition rules for phasing out the harmonized sales tax on new homes, and details will be announced this Friday, Finance Minister Kevin Falcon says.
A few details remain to be finalized with Ottawa, but it is important to sort through the complicated tax change ahead and give the home building industry certainty, Falcon told reporters Tuesday.
HST applies to new housing valued at more than $525,000, and will continue to do so until early March 2013 when the provincial sales tax is scheduled to be reinstated.
"The key is that you will have certain situations that straddle the the PST world and the HST world," Falcon said. "So for example you may have a house that has been constructed in the HST world that gets all the benefit of the lower costs that consumers realize as a result of not having PST on all of the input costs that go into building a house.
"But they may be selling that house in a PST world, where you're not going to have the corresponding value added tax. So you have to have rules so that the industry understands exactly what happens in cases like that, as an example."
Falcon noted that the latest federal statistics show B.C. housing starts are up 26 per cent in January, despite the extra sales tax on higher-end housing and uncertainty about the tax changes.
"That's certainly better than December and I think that these rules will give an even stronger signal to the housing sector that there is now a lot of certainty," Falcon said.