DID YOU KNOW... (1 of 5 series)
Between 1947 and 1952, Billy and Bobby Byrne robbed over 52 banks across Ontario. However history has all but forgotten them. In fact, they may be more famous for the outrageous stunts they pulled, rather than the crimes themselves. Here is one of five facts about Canada`s most bizarre bank robbing Brothers: The Byrne Brothers were never caught. After their biggest bank job in 1952, the boys disappeared forever. Taking with them nearly 2.5 million dollars with them.
GST and New Homes
The Goods and Services Tax replaced Federal Sales Tax in 1991. Although the tax is collected at a rate of 7% on the sale price of goods and services, it doesn’t apply to every type of home or every form of real estate service.
New home purchases are subject to GST but may qualify for a GST rebate. Resale homes are sold exempt from GST.
When you buy a newly constructed home, condominium or townhouse, the entire purchase price including land is taxable. If the property is to be rented to tenants, the full 7% GST is charged on the purchase price. However, if the home is gong to be your primary place of residence, it may qualify for a partial GST rebate, depending upon the sale price.
For primary residences costing $350,000 or less, you will receive a rebate of 36% of the GST paid, to a maximum of $8,750. That means you pay approximately 4.5% GST (not 7%) on the purchase price.
Example #1
- You buy a new home for $200,000. The 7% GST is $14,000, less a 36% rebate of $5,040. So, you pay $8,960 in GST.
- The maximum rebate is $8,750. The rebate for new homes costing between $350,000 and $450,000 declines to zero on a proportional basis. Here is how it works:
- For each $1,000 of purchase price above $350,000 the maximum rebate of $8,750 is reduced by 1%.
- Therefore if your purchase price is $370,000 you are $20,000 over and must reduce the maximum rebate by 20%. As such the maximum rebate of $8,750 reduced by 20% equals $7,000.
- For a home priced at $370,000 the GST payable, at 7%, is $25,900.
- The adjusted maximum rebate is $7,000 so the GST payable is $18,900.
- Adjusting the maximum rebate continues until the rebate is reduced by 100%, there is no rebate, which occurs at homes priced at or above $450,000. New homes selling for $450,000 or more do not qualify for a GST rebate.
GST and the Resale Home
You don’t have to pay GST on the purchase price of a used residential home. In other words, the purchase is "exempt" from GST.
Revenue Canada defines "used residential property" to include an owner-occupied house, condominium, apartment, summer cottage, vacation property or non-commercial hobby farm. They refer to "used" as residential property that has been occupied as a residence before you bought it.
Used property can also mean a recently built house that is substantially complete and has been sold at least once before you buy it. For example, if a new house is purchased and resold before being occupied, the home’s resale price will normally be exempt from GST.
GST and the Real Estate Transaction
GST applies to most of the services provided in completing the real estate transaction. For example 7% GST is applied to the commission a Realtor charges for facilitating a sale. The tax is paid by the person responsible for paying the commission- usually the seller.
Realtor commissions are taxable even if the total GST owed is reduced by a rebate, or the sale of the property is exempt from GST. For example, if you sell a used home, the sale price is exempt from GST but the Realtor’s commission is still taxable.
GST applies to many other services involved in the real estate transaction. These include legal fees, appraisals, surveys and legal assistance. Again, GST is charged on these fees regardless of whether the house you purchase is exempt from the tax.
GST and Rent
No GST is payable on residential rents. However, if you employ a Realtor or another professional to find and GST and Rentarrange a tenant for your rental property, GST applies to the fees and commissions they charge for providing this service. GST also applies to the fees charged to the landlord for property management, as well as repair and maintenance services. Monthly fees charged by condominium associations are not subject to GST.
Land Transfer Taxes
Along with the GST there are also other taxes that a purchaser must pay. Included is the Ontario Land Transfer Tax and the BC Property Transfer Tax. These are Provincial taxes levied on the purchase of property.
BC Property Transfer Tax
Property Transfer Tax is a provincial tax that is payable upon the purchase of real estate in British Columbia. The tax is equal to one percent on the first $200,000 in value and two percent on the balance. There currently is an exemption for first time buyers but there are a number of requirements to qualify, including:
- (a) Must be the purchase of a principal residence;
- (b) The purchaser must be a Canadian citizen or permanent resident of Canada;
- (c) The purchaser must have resided in the province of British Columbia for at least one year immediately prior to the application to register the purchase of the principal residence;
- (d) The purchaser must not have previously owned an interest in a principal residence anywhere in the world;
- (e) The fair market value of the land and improvements must not exceed $275,000 within the Capital Regional District, Greater Vancouver, Central Fraser Valley, Dewdney-Allouette and Fraser Cheam and $225,000 if the property is located elsewhere in the province;
- (f) The amount borrowed to finance the purchase, and registered against title, must be 70% or greater of the fair market value; and
- (g) The amount borrowed must have a term of at least one year.
These are major requirements which should be reviewed with your realtor, lender or lawyer to ensure that you qualify.
GST REBATE: Three Types When Buying From A Builder
NOTE: GST does NOT exist for resale homes and is only applicable when buying a new home from a builder.
GST GOVERNMENT REBATE (typically assigned by buyers to builders where GST is included sale price)
The GST government rebate applies to new homes purchased from a builder which are to be used as a primary place of residence for the purchaser or an immediate family member as defined by the governing rules. Purchasers of new homes priced up to $350,000.00 may qualify for the maximum rebate of $8,750.00 or 36 per cent of the GST paid on the purchase price, whichever is less. For homes priced at more than $350,000.00 (but less than $450,000.00), the rebate gradually reduces to no rebate for homes selling for $450,000.00 or more.
NOTE: The rebate is almost always assigned directly to the builder(as referred to in the fine print of most builder sale agreements) since GST is typically included in the purchase price; therefore, the GST rebate is not a practical consideration for most purchasers unless the purchaser is paying GST in addition to the purchase price.
WATCH OUT: for projects on the subway line with small apartments (primarily one bedrooms) which are marketed by the builder primarily towards the investor purchaser (rather than an intended owner/occupier type of buyer). In some of these projects, the GST Rebate (that would usually be obtained by the builder directly from the government in a typical owner-occupied project) will be paid by the purchaser investor to the builder in addition to the purchase price as a closing adjustment. In such an event, or in any case when an investor does not qualify for the GST rebate to be paid directly to the builder (having been assigned to the builder by the purchaser as stated in the terms of the purchase agreement with the builder), the purchaser investor may apply for a return of the "lost" GST rebate (which will be paid to the builder by the buyer as a closing adjustment). Such an application form for a GST rebate refund can be obtained by phoning 1-800-959-2221 and ask for the GST rebate refund application form #524 and explanatory booklet #RC-4231.
The following chart shows how to calculate the GST New Housing Rebate for new homes.
| Purchase Price | Rebate Calculation |
|---|---|
| $350,000 or Less | $8750 or 36% of the GST paid, whichever is less |
| $350,000 to $450,000 | $8750 X ($450,000 - Price)/100,000 |
| $450,000 or more | No Rebate |
GST TRANSITIONAL REBATE (MAY 2006) - ( 7% TO 6%)
On May 2, 2006, the government of Canada announced a reduction to the GST from 7% to 6%. As a result, purchasers of newly constructed dwellings who executed the Agreement of Purchase and Sale with the builder on or before May 2, 2006 AND where possession AND ownership of the dwelling takes place after July 1, 2006 are entitled to a Transitional Rebate representing the 1% reduction less any applicable GST rebate credited to the purchaser on the statement of adjustments. GST transitional rebate forms (being form GST193E) can be accessed at Canada Revenue Agency’s website www.cra-arc.gc.ca
GST TRANSITIONAL REBATE 2008 - (6% TO 5%)
The further reduction in the GST from 6% to 5% entitles a purchaser who executed a builder agreement before October 30, 2007 AND where possession AND ownership takes place after January 1, 2008, to a transitional rebate of the 1% reduction.
NOTE: A purchaser who signed the builder purchase agreement on or before May 2, 2006 and where possession and ownership take place after January 1, 2008 is entitled to both rebates. The same transitional rebate form is used (form GST193E) accessed at Revenue Canada’s website www.cra-arc.gc.ca for either GST transitional rebates or for both together.
Steve's Rates
| Mortgage Term | Our Rates | Standard Rates |
|---|---|---|
| Variable Rate | 3.80% | 6.01% |
| 6 Month Closed | 5.90% | 6.45% |
| 1 Year Closed | 3.50% | 5.60% |
| 2 Year Closed | 4.10% | 6.25% |
| 3 Year Closed | 3.75% | 6.25% |
| 4 Year Closed | 4.39% | 6.09% |
| 5 Year Closed | 4.49% | 5.59% |
| 7 Year Closed | 6.00% | 7.20% |
| 10 Year Closed | 5.99% | 7.25% |
| 15 Year Closed | 6.55% | 0.00% |
| 18 Year Closed | 6.65% | 0.00% |
| 25 Year Closed | 6.65% | 8.65% |
Rates are subject to change with very little notice and certain conditions may apply to individual mortgage applications, QAC, E&OE
For the best rates call 1-866-993-8787.
Resources
Business Supporting Business — Thank You:
Investments
www.thenewwestside.ca
Insurance
Canyon Insurance covers all your needs, ask for Harry Mason
hmason@canyoninsurance.ca
FCm Travel Solutions
wes.flanagan@fcmtravel.ca
Jocko Toic - Consultant
Investors Group Financial Services
3500 Carrington Road, Suite 102, Westbank BC, V4T 3C1
Ph. (250) 707-3265 Cell (250) 869-9636
Fax (250) 768-4563 Toll Free (866) 768-4546
Email jocko.toic@investorsgroup.com
Success starts with a Sound Plan
Private Home Sellers
www.privatehomesellers.ca
David Beeson
Realtor for the Kelowna Area
Royal Lepage Phone:1-800-747-6954
Email: davidbeeson@royallepage.com
Spring Creek CONSTRUCTION & MILLWORK
Established 2007 by Owner/Operator Florian Hoppen with 25 years in the woodworking industry.
Spring Creek offers quality custom craftsmanship and superior service on:
- Woodwork & Millwork
- Cabinetry Building & Installation
- Woodcraft Doors
- Renovations
- New Building Construction
References for Projects and Workmanship upon Request
Contact: Florian Hoppen
Ph: 403-931-2247 Cell: 403-510-8925
Email: springcreek@platinum.ca
Friends Supporting Friends — Thank You:
Krystal Beisick
www.krystalbeisick.com
For Investments check out — www.renascencedevelopments.com
Ask for Lisa Thomas lisa@renascencedevelopments.com
A Quote to Note:
It is not the mountain we conquer, but ourselves.
- Edmund Hillary
Also a member of the Okanagan Mortgage Lenders Association
Contact
At Prolink Mortgage Inc., I have over 30 lending financial mortgage institutions in Canada with Steve Faux sourcing the best rates and the best products to suit your needs!
Direct Line — 1.866.993.8787
Email — steve@yourmortgages.ca
Refer a Friend
If you found any of the information in this email to be of value, please refer a friend to sign up!
