On April 1, 2013 when the HST was discontinued, the BC government introduced the 2% Transition Tax for the purpose of offsetting the revenue losses through the PST’s return. This temporary transition tax applies to new homes that were at least 10% complete as of April 1, 2013, and will terminate on March 31, 2015.
A timeline will help illustrate how much tax one would have to pay when purchasing a new home:
. If a home was built and also possessed before April 1, 2013, the buyer would have paid 12% HST.
. If a home’s construction began before April 1, 2013, but the buyer takes possession between April 1, 2013 and March 31, 2015, the buyer would have to pay 5% GST and 2% Transition Tax.
. If a home‘s construction began after April 1, 2013, the buyer would have to pay 5% GST on new home construction and the builder would have to pay 7% PST on the building materials.
Instead of BC new housing rebates program, the temporary transition tax rebate program has come available to new home builders. The transition tax rebate can be calculated on the home’s degree of completion as of April 1, 2013. See the following table:
% Construction Completes Transition Tax Rebate as a
as of April 1, 2013 % of fair market value
Less than 10% not applicable
10% <= and <25% 1.5%
25% <= and <50% 1.0%
50% <= and <75% 0.5%
75% <= and <90% 0.2%
90% or greater 0.0%
As always, when dealing with GST/HST questions in regards to new home sales, prospective buyers should consult with their accountant, legal adviser or the Canada Revenue Agency office. For more information go to