If you have clients who will be buying a new home in the next few months or over the next two years, then you need to know about the 2% BC Transition Tax.

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It is a new tax that comes into effect on April 1, 2013. It will apply to the sale of new residential homes that are 10% or more complete as of April 1, 2013. The 2% BC Transition Tax will end on March 31, 2015.

The 2% BC Transition Tax applies to the full price of a new home, which is 10% of more complete, where ownership or possession is on or after April 1, 2013, but before April 1, 2015. The 5% GST also applies to the full price of a new home, where ownership or possession is on or after April 1, 2013.

With the end of the HST and the return to the PST/GST system, the BC government chose to introduce the 2% BC Transition Tax as a way, in their words, “to ensure the equitable application of tax for purchasers of new residential homes currently under the HST system” and after April 1, 2013 when the province returns to GST on new residential homes. The government also wishes to replace some of the revenue lost through the return to the PST.

BC’s portion of the HST will no longer apply to newly built homes where construction begins on or after April 1, 2013. Builders will once again pay 7% PST on their building materials (construction inputs). The provincial government asserts that on average, about 2% of the home’s final price is embedded PST that builders pay on their building materials.

The Transition Tax rebate for builders (sellers) recognizes that the builder will not be able to claim input tax credits on the PST paid on building materials acquired after March 31, 2013. The rebate is available where both of the following conditions are met:

• The 2% BC Transition Tax applies to the sale of new housing; and

• Construction or substantial renovation is at least 10%, but not more than 90%, complete before April 1, 2013.

The Transition Tax rebate for sellers of new housing will be calculated on the degree of completion of the housing as of April 1, 2013:

The 2% BC Transition Tax does NOT apply to:

• the sale of vacant land, whether the GST would apply or not;

• the sale of new commercial units; or

• REALTOR® commissions.

Source: BCREA PST Transition Rules website at www.bcrea.bc.ca/government-relations/pst-transition-rules

For more information view the Board’s Fact Sheet: Information about the HST/PST New Housing Transition Rules.
If you have questions, call Harriet Permut, Manager, Government Relations at 604.730.3029.

Quality homes from a quality builder

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Stacy Black
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One of the most frequent questions a van line is asked is “How do you calculate moving estimates?” Contrary to popular opinion, there is no mysterious man behind the curtain pulling levers while the cash register continues to ring. The calculation of charges is based on two factors; the weight of the shipment and the distance being moved. These two components are entered into a “tariff.” A tariff is a schedule of prices required to be filed with the United States Department of Transportation. Moving companies have tariffs for local moves, moves within their state (intrastate), and moves between states (interstate). While some local movers do not perform interstate moves, all of the large national van lines have interstate authority and applicable tariffs. The tariff includes packing charges, fuel costs, storage rates, surcharges for bulky items and auto transport rates. All special circumstances and additional charges must be explained in the published tariff.

The distance is then calculated by referencing a zip code grid that standardizes mileage between zip codes.The weight is initially estimated by completion of a visual survey prior to the move. A qualified surveyor will visit the residence and complete an inventory of each item that is being moved. There is a certain amount of discretion required to differentiate the weight of items that may measure the same size but vary in material. For example, the contrast between a wicker shelf and a mahogany bookcase based solely upon cubic feet would result in a significant discrepancy due to weight variance. In addition, the surveyor must also be capable of translating full cupboards and closets into the number of boxes required. Traditionally, boxed household goods will usually account for 35%-45% of the total shipment weight.

Most moving companies utilize proprietary software that quickly and efficiently calculate the cost by distance and estimated weight. The customer is then provided a copy of the estimate. Once the shipment is loaded, the actual weight is verified by a certified scale at an authorized weigh station.

Don’t Forget! 5 Things to Remember When Moving

Your client’s moving day has finally arrived and they are hoping that nothing has been missed. Here are some overlooked details that should be considered when planning a move.

1. Keep closing records handy. If you are closing on a new home, ensure you do not pack away any records that might be needed for the closing. Ask your agent if there is anything that you may need to bring before packing.

2. Items that can’t be shipped. Traditionally, the items that cannot be shipped are hazardous materials, explosives, flammables and corrosives. You will want to have a plan to transport these items or dispose of them before you leave. In the event that you will be transporting firearms on your move, you will want to check the applicable laws in the states that you will be traveling through on your way to your new home.

3. Call the utility companies and/or make adjustments. Place a call to the utility company to terminate service if you have sold the home. If you still own the home, lower the thermostat to a setting appropriate for a vacant home in order to save money. If it is in the winter months you will not want to lower it past the recommended 50 degrees to prevent the pipes from freezing.

4. Mail forwarding. Contact the post office and complete the mail forwarding form at least 10 days prior to moving.

5. Keep the Move Advocate number handy. Your Move Advocate is dedicated to making your move successful. Call 800-617-1918 for assistance. We are happy to help!

A Balanced Market

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Even with sales well off their ‘frenzied’ multi-year highs, prices, since peaking last May, are down only marginally, on average -5.9% (no worse than a bad week in the stock market).

Patient Sellers and Persistent Buyers are the new realities of today’s market.

DOM (days on the market) is increasing for sellers with some choosing to hold-off on the sale or remove their homes from the market until things improve. The resulting ‘squeeze’ in the supply of listings is helping keep prices buoyant while creating a challenging environment for buyers in certain categories/areas.

What’s ahead for 2013?

Improving economies in the US. & China should bolster our resource driven economy helping the employment picture & consumer confidence. The dreaded HST is gone as of April 1 which will reduce the cost of buying & selling while improving the prospects for an already active new home market.

Interest rates are likely to remain at record low levels for the foreseeable future (under 3% for 5 year term!) while we could see the Bank of Canada loosen lending requirements in the second half in an effort to re-ignite a market that they have successfully stifled.

The provinces annual net population increase is 43,000 while only 25,000 new homes are slated to be built this year. Then there’s the upcoming provincial election…?

In summary, prices are likely to remain flat this year, giving investors, first-time and move-up buyers a great opportunity to make the right move.

Looking at the big picture…Vancouver remains one of the best places to live in the world. Now, more than ever, Vancouver offers good value when compared with other world class cities.

BC Real Estate Association
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Vancouver, BC – February 18, 2013.  The British Columbia Real Estate Association (BCREA) reports that a total of 3,410 residential sales were recorded by the Multiple Listing Service® (MLS®) in BC during January, up 1.8 per cent from December on a seasonally adjusted (SA) basis, but down 13.6 per cent compared to January 2012.  Similarly, total sales volume increased 3.8 per cent SA, but declined 16 per cent from the same month last year. The average MLS® residential price in the province was $514,134, up 3.2 percent from December, however, down 2.7 per cent from a year ago.

“Despite a modest uptick in consumer demand last month, home sales have remained relatively stable at a noticeably lower level since last August,” said Cameron Muir, BCREA Chief Economist. “Continuing low mortgage interest rates combined with an easing back of home prices in some areas is expected to trend home sales higher during the spring and summer months.”

“The ratio of home sales to new listings is indicative of a balanced market at 42 per cent,” added Muir. “However, there remains a backlog of existing home listings to either sell or be pulled off the market before supply and demand can be considered in check.”

Dramatic swings in average price statistics caused by a surge and subsequent pullback in luxury home sales appear to be near an end. The year-over-year change in average prices now more closely reflects the home price indices in Vancouver and the Fraser Valley.

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Q: Some media reports said that brokers have to keep the new FINTRAC records for seven years. Your material says 5 years. Which is it?

A: This information is not correct. Brokers are required to keep the information on file and available in FINTRAC requests for FIVE (5) years.

Q: Are new builders obligated to collect the above information as REALTORS® are for compliance with FINTRAC? What about lawyers?

Q: Some media reports said that brokers have to keep the new FINTRAC records for seven years. Your material says 5 years. Which is it?

A: This information is not correct. Brokers are required to keep the information on file and available in FINTRAC requests for FIVE (5) years.

Q: Are new builders obligated to collect the above information as REALTORS® are for compliance with FINTRAC? What about lawyers?

A: Builders are not captured by the new Federal AML/ATF regulations until February 20, 2009. Lawyers are not captured until December 30, 2008. While Lawyers must conform to the new client identification and record keeping requirements, they have no legal obligation to report this information to FINTRAC because they are protected from disclosing because of solicitor-client privilege. All implementation guidelines can be found on the FINTRAC website at www.fintrac.gc.ca

Q: Who else has to report this type of information to FINTRAC?

A: Reporting entities must report suspicious and certain other transactions to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). In addition to real estate brokers and sales representatives, reporting entities include the following:

• financial entities (such as banks, credit unions, caisses populaires, trust and loan companies, and agents of the Crown that accept deposit liabilities);

• life insurance companies, brokers, and agents;

• securities dealers, including portfolio managers and investment counselors;

• persons engaged in the business of foreign exchange dealing;

• money services businesses;

• agents of the Crown that sell or redeem money orders;

• accountants (when carrying out certain activities on behalf of their clients);

• certain casinos.