The switch back to GST and PST has been months of headaches for B.C. brokers, and an unwelcome brake on new home buyers waiting for the April 1 deadline, says Brent Morgan.
“People buying new homes are holding off until April 1, so they can save on taxes,” says Morgan, Director of Sales and Systems with Mortgage Mentor in Vancouver. “There is a savings to be had on new home construction.”
B.C. homebuyers are waiting until April 1 to buy and save money, when that province’s HST reverts back to separate GST and PST.
The province’s harmonized sales tax is 12 per cent, consisting of 7 per cent provincial sales tax and 5 per cent goods and services tax. Given the option to pay 5 per cent instead of 12 per cent on a home worth hundreds of thousands of dollars, homebuyers are waiting the next few weeks – and delaying the usual spring bloom of business for brokers.
“The builders have been seeing this too,” says Morgan, adding that the concurrent cooling off of the once red-hot west coast housing market has contributed to a quiet winter for brokers.
But another side effect of the return to the GST and PST is the mountain of new paperwork and accounting.
“We have had to change all of our invoices, how we do our receipts,” Morgan told MortgageBrokerNews.ca. “We’ve been preparing for this transition from HST back to GST and PST the last few months. It has been a nightmare – the one tax (HST) was much simpler to administer.”
Morgan says that B.C. residents might have embraced the HST had the benefits been better explained, and if it had not been “shoved down their throats.”
Ironically, on the other side of the country, P.E.I. will be implementing the Harmonized Sales Tax the same day. No foolin’.