Oct 31, 2007 - GST cut on new homes effective immediately
October 31, 2007
GST CUT ON NEW HOMES EFFECTIVE IMMEDIATELY
TO: Developers, builders, financial and service/professional members
While the GST cut from 6 per cent to 5 per cent on all other goods and services is effective January 1, 2008, it is EFFECTIVE IMMEDIATELY on new homes, avoiding any potential disruption to the market by eliminating any incentive for home buyers to defer their purchase decision until the New Year.
According to the transition rules issued yesterday by the federal government, where an agreement of purchase and sale is signed after October 30, 2007 and ownership and possession are transferred on or after January 1, 2008, the GST rate will be 5 per cent.
As well, home buyers who purchased after May 2, 2006 but on or before October 30, 2007 will be subject to the 6 per cent tax rate but will get a one per cent transitional rebate (less GST new housing rebate adjustment) direct from the federal government, so long as ownership and possession are transferred after January 1, 2008.
Home buyers who purchased on or before the date of the previous GST rate cut from 7 to 6 per cent (May 2, 2006) will be subject to the 7 per cent rate but will get a two per cent transitional rebate (less GST new housing rebate adjustment) direct from the federal government, so long as ownership and possession are transferred after January 1, 2008.
Unfortunately, for those home buyers where the Agreement of purchase and sale was signed after May 2, 2006 and ownership or possession is transferred before January 1, 2008, the 6 per cent GST rate will apply with no transitional rebate.
The above into was gleaned directly from the federal government web site www.fin.gc.ca/budtoce/2007/ec07_e.html.
We encourage all members to review the additional details contained on that site.
click here for a pdf of GST tax information.