HST is a new home buyer’s tax problem. We now live in a new tax world.

March 21, 2010 by Dan White.

 HST is the final nail in the coffin of what home ownership is all about. And it is not all bad news. The dilemma that has been created,  is HST is a tax problem for home buyers. This changes the price of homes that people can afford. The HST will give birth to smaller more affordable homes. Especially for new home buyers.

As far as downtown Vancouver condos having $100,000 in HST is not so much of a problem in the greater scheme of things. Those that travel in those circles, can afford more tax problems.

Eventually there will be a positive effect on the economy due to HST, but the effect on home ownership is permanent.

There will be a positive effect on the home renovation business. Renovations versus moving has taken an tax aptitude adjustment. This area of the economy will boom.

Want to start a new business…. ?  How about training for home owners in being their own renovators  ?

“Hello 1950’s” way back then, people could not afford big houses. The average family had a small home of less than 1,000 square feet. They had one car and they had a bunch of kids. They learned to live together.

Then houses got larger and the basements got bigger and were large unfinished storage areas or they became finished and the homeowner had tons of living space… and the size of homes grew because people could afford more and more. Or they could afford more and more debt.

Then zoning regulations were passed preventing small homes from being built. No one wanted to be embarrassed by having their monster home devalued by some modest home next door.

Then came the condos… they don’t even have basements and there is a plethora of condos that have less than a 1,000 square feet. They filled a lifestyle need that accepted not having basements and large amounts of rarely used space.

Now in “1950 revisited,” in order to get new home buyers, there is going to be a  new offering. Smaller and smaller homes, with finished basements or that can be finished by the new home owner. Basements will become the kitchen family room for us “want to be Italians,” who love the family interaction of living and eating together.

The kids won’t be able to smoke pot in the house and not be noticed. Mom and Dad will have the kids underfoot. Now that is a concept…

Houses will be to live in, not to impress people. What we now have is a concept of being HST taxed into reality of needing to live within our means. Modest living will become our new reality.

The second car will again be the old beater… Cheap will be called “Less Tax.”  Less tax is less problems. CRA auditors will no longer be offended by life styles beyond the auditor’s own ability to live. The CRA Lifestyle Audit will go away for the average family, and be reserved for the rich.

The concept of average families being able to live in the styles of the last few decades has now been taxed away. Canadians will learn to live tax smarter. Failing which, they won’t be able to pay their taxes and will financially crash and burn.

You are not “Richer than you think.” That BNS ad should be called a BS ad.

To learn how to turn the page on tax reduction strategies go to www.taxauditsolutions.ca

Dan White

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Read what the Vancouver Sun has to say on this matter.

 Why I have come to think of the new HST as a death tax

And why I think this year, as never before, the first-time buyer who wants to make informed choices needs Tuesday’s seminar

By Peter Simpson, Vancouver SunMarch 20, 2010

“Of two things you can be certain -death and taxes.” -Benjamin Franklin

As forward-thinking as he was, inventor Ben likely never imagined death would be taxed.

B.C. residents are a scant 3 1/2 months away from the implementation of the harmonized sales tax -the dreaded HST -and, yes, death is included on the provincial government’s hit list.

In fact, a Surrey funeral home has been running public-notice ads in local newspapers urging folks to beat the HST. “Plan now and save. Prearrange your cemetery and funeral plans now to avoid paying hundreds of dollars in extra tax … save seven per cent.”

I resisted the temptation to call the funeral director to ask if he had problems with crowd control as panicked people picked through the caskets.

And is it just me, or does anyone else find it morbidly amusing that the tax date, July 1, is the day Canadians are usually celebrating, not lamenting a huge hole in their wallets?

More businesses are now offering beat-the-HST specials. Expect these marketing efforts to multiply through the spring as businesses are anticipating a post-HST sales hangover during the summer.

As we inch closer to H-Day, politicians on both sides of this issue are jockeying for position. The other day, I found in my mailbox a flyer from federal NDP leader Jack Layton. The headline screamed: “Thanks to the HST, Vancouver homebuyers will get ripped off.” Layton wanted me to tick off a box indicating I agreed with him and return the form, postage paid. I passed.

Recently, provincial Finance Minister Colin Hansen held a news conference to announce that University of Calgary public-policy chair Jack Mintz believes the HST will boost investment and create thousands of jobs. No surprise here: Mintz is the academic who supported Ontario’s HST model last year.

I opined many times that the HST might be beneficial to some industry sectors. I get that, I really do. But the HST will impose a heavy burden on consumers, especially on big-ticket items like new homes. To its credit, the provincial government, after months of intense pushback from the homebuilding industry, made adjustments to how the HST is applied to new homes.

Originally, the rebate threshold was $400,000, ridiculously low for the Lower Mainland. There was also a one-time rebate of $20,000 on homes priced higher than $400,000. Last November, the threshold was raised to $525,000 and the rebate hiked to $26,250.

At the time, I said the enhancements deserved a handshake, but that we were still a long way from slapping out any high-fives. Many new homes in this region are priced well above $525,000. And the people plunking down their hard-earned cash for those homes are average folks, representing all age groups and professions -teachers, blue-collar workers, office personnel, firefighters, whatever.

A developer told me the average HST bill on his downtown Vancouver condos will be $100,000, after the rebate. Remember when you could buy a whole condo for less? The developer also said he, along with many competitors, are scrambling to to get homebuyers into their homes before the HST hammer hits.

Recently, at the Canadian Home Builders’ Association annual conference in Victoria, I attended a presentation by pollster Allan Gregg, who outlined his latest polling results on government actions and the housing market. Most of those polled said the most important issues facing Canada are the economy and taxes. The environment -by a wide margin -was the least important issue.

Regarding the HST, the question was asked: “On balance, do you think the HST will make it easier or harder for people like you to buy a house in the future?” Not surprisingly, 69 per cent of those polled in Ontario and B.C. said the HST will make it harder or significantly harder to buy a home.

Understandably, house prices and other affordability factors significantly affect the intentions of renters, who were asked: “How likely do you think it is that you will be purchasing a home in the next two to three years?” Sixty-five per cent indicated it was either not very likely or not at all likely.

On the financing front, 69 per cent of the renters who intend to purchase a home believe it will be easy for them to obtain a mortgage. Regarding homeowners who intend to renegotiate their mortgages, 83 per cent were confident it would be easy for them to obtain a mortgage.

Overall, Canadians are optimistic about the future, and both consumers and governments now recognize how important housing is to the economic recovery and growth.

Another study released last week by RBC found that 91 per cent of Canadian homeowners believe a home is a good investment, the highest level in 12 years. Sixty per cent believe housing prices will rise in 2010 and 64 per cent believe mortgage rates will also rise. Bottom line, now is the time to buy.

The RBC report notes homebuyers, particularly first-timers, need solid advice about what they can afford, not only today, but down the road. And this sage advice is the perfect segue into where exactly first-time buyers can get all the advice they need to make more informed purchase decisions -the 16th annual free seminar for first-time homebuyers, presented next Tuesday by the Greater Vancouver Home Builders’ Association and the Homeowner Protection Office.

The Vancouver Sun and Province are sponsors.

Seminar attendees will get answers to these questions: What location is preferable? What type of home is best matched to needs and financial resources? What are the mortgage options? What are the legal considerations and closing costs? How will the federal government’s new mortgage qualifying rules and upcoming HST affect buyers? What is involved with buying a pre-sale condo? What are the benefits of builder licensing and mandatory home warranties?

Pre-registration is required. Learn more about the seminar and register at gvhba.orgor call . Registrations will also be accepted via voice mail during the weekend.

Peter Simpson is the chief executive officer of the Greater Vancouver Home Builders Association.
© Copyright (c) The Vancouver Sun

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