Friday, July 24, 2009

New tax hit on real estate

But the biggest tax hit could be on those who buy new homes, which were previously exempt from the PST but not the GST.

The province will offer partial rebates of five per cent to a maximum of $20,000 on new homes. But someone buying a new $800,000 home — roughly the average price for new house in Vancouver — will still pay an extra $36,000 in tax under that formula.

Vancouver realtor Tom Everett said the additional cost will cripple a market that had been recovering.

"They have absolutely lost their minds if they expect people to pay that sort of a tax. I don't understand why on earth the government would do that to the housing economy, seeing as housing is one of the staples of a healthy economy, as you can attest to by checking out what's happening in the U.S.," Everett said.

The provincial government insists the majority of new homeowners won't see a difference in prices when they buy a home under $400,000, because of another PST rebate program for builders. But critics note there is nothing to ensure those rebates are passed on to consumers.

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