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How the harmonized sales tax will affect Vancouver’s resale real estate market

The harmonized sales tax (HST) will become applicable to the construction of new homes in BC as of May 1st this year, but it will not be applied to the sales of homes that have been previously occupied (re-sale).  Does this mean the implementation of the HST will not have any effect on the re-sale market?  No, and here’s why.

According to industry and tax experts the homebuyer and seller will still pay more costs as the tax will apply to items like real estate fees, home inspections, appraisals and the cost of clearing title. Other increases will come in renovations, maintenance, upgrades, and moving expenses. It can add up, but is nowhere near the cost of what the HST would be.

For example with the purchase of a $450,000 resale home, there will be approximately $16,500 in closing costs for such things as appraisals, inspections, survey fees, and realtors fees. With the HST a buyer will pay approximately $1,100 more due to the new tax.   

Fortunately some of the services associated with the purchase of a re-sale property will not be affected.  Bank fees   - which are not subject to the GST and will not be subject to HST – and notary publics and lawyer’s fees which are already subject to GST and provincial sales tax which equal the same cost as the HST.

Will the HST have a significant effect on Vancouver’s resale real estate market? No, but it will have a little bite.