Paul Young - Real Estate Questions & Answers: 1st Time Buyers get $10,000 Tax Credit till Mar31,...

Paul Young - Real Estate Questions & Answers: 1st Time Buyers get $10,000 Tax Credit till Mar31,...: First Time Home Buyers can get $10,000 Tax Credit under following circumstances: 1/  Buying newly built homes . 2/  The $10,000 refun...

1st Time Buyers get $10,000 Tax Credit till Mar31,13.

First Time Home Buyers can get $10,000 Tax Credit under following circumstances:

1/  Buying newly built homes.

2/  The $10,000 refundable income tax credit is from BC Government to support new-home construction sector.

3/  Limited time from Feb 21, 12 to Mar 31, 13.

 

5% federal GST On New Homes after April 1, 2013?

You only have to pay 5% federal GST on buying new homes after April 1, 2013:

1/  If offer is signed on or after April 1, 2013.

2/  If possession takes place on or after April 1, 2013.

3/  5% GST will replace 12% HST.

4/  Federal rebate (36% of 5% of house price) will still apply if you are qualified.

How come 2% embedded PST?

1/  Builders used to pay PST on construction materials.

2/  PST was part of the cost to build a house.

3/  The PST was included or embedded in the house selling price.

4/  The embedded PST on the average was about 2% of the house price.

Buy A New Home During PST/HST Transitional Period?

Transitional Period is from April 1, 2012 to April 13, 2013.


If you buy a NEW house during transitional period:


1/  you will have to pay a transitional BC provincial tax of 2% on house price.


2/  you will still like before have to pay GST (5% on house price) to the federal government.

Principal Home Buyers still get federal rebate: 

**36% rebate x 5% GST x hse price $350,000 = maximum rebate $6,300

**from $350,000 to $450,000, maximum rebate $6,300 will be phased out on a straight basis; at $450,000, federal rebate=0

PST/HST Transitional Rules start Apr 1, 2012. Formula?

In BC, PST will replace HST on Apr 1, 2013.

The transitionl rules start Apr 1, 2012, one year earlier.

The Provincial Enhanced New Housing Rebate Formula will give Principal Residence Buyers more rebate back if House Price is higher than $525,000:

Old Rebate Formula   = 5% (rebate) x Hse Price (up to $525,000) =$26,250 (Max)

Transitional Rebate Formula=5% (rebate) x Hse Price (up to $850,000) =$42,500 (higher Max)

Not Living There All The Time U Owned Your Principal Residence?

Do you have to report sale of your principal residence if you don't live there the whole time you owned it?

1/  Yes, you have to report sale on your tax return.

2/  You have to calculate the PRE (Principal Residence Exemption) and taxable capital gain.

3/  PRE = (# of years used as Principal Residence + 1)   x    Total Capital Gain
              Total # of yr You Owned Your Principal Residence

The extra 1 year in the equation means the year of moving, which will be counted as principal residence.

4/  Taxable Capital Gain = Total Capital Gain  minus  PRE