Sunday, November 22, 2009

How much tax is too much for Kelowna real estate?

How will the HST affect Kelowna real estate? Information has been trickling in slowly but surely. I think everyone was pretty sure that new housing would not be taxed at 12%... but how much then, and what are the rules and rebates.
When considering real estate and housing, the government must realize that it’s very important to everyone that affordable housing is attainable. HST will be paid out when purchasing a NEW home after July 1, 2010. With the new threshold of $525,000 it would appear that there will be no new additional tax (5% GST will still apply) and that homes over $525,000 will, after rebates, be charged an additional 2%. This move will add even more tax on the heavily taxed process of buying a home.
Consider the example of purchasing a new home for $525,000. There is the property transfer tax currently being paid on every real estate transaction in BC whether the home is new or not. This amounts to 1% up to $200,000 of purchase price and 2% on the balance, or $8,500 for our example home. GST at 5% if the home is new. There’s another $26,250. Currently we pay 5% GST on services like lawyers and real estate agent's. Another $534 for the taxman. Then of course, there’s annual property tax where on the $525,000 home you’d be paying around $2,800. Let’s assume you’re living here and qualify for the homeowners grant of $570 which then makes your annual tax $2,230.
Real estate in Kelowna is a valuable commodity and people realize that. We’ve been lucky to have weathered this last downturn fairly well with moderate price adjustments that have re-ignited people’s ambition of owning property here. However, how much more of a tax burden can we take when you consider that our example of buying “modest and average” home in Kelowna is going to cost an additional $37,514.00!
Do you think we pay too much tax on our housing?

Talk to you soon...

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