So as many of you may have heard, a fairly important new provincial budget just got released, and it did affect a lot of things. STC, libraries, cigarettes, BEER! But as it pertains to real estate, there was one significant change, and that was PST expanding to construction serves. Here's the basic rundown:
Starting April 1, the provincial sales tax (PST) will be expanded to construction services. After some initial confusion within the industry as to what that meant exactly, the province has clarified that it won't be a full six per cent applied to contracts.
So under the current system, PST is applied to building materials that go into a construction project. The expansion of the PST will now be applied to labour as well. The province explained a typical contract would amount to 40 per cent materials and 60 per cent labour. That means, instead of a full six per cent, many contracts will see a rise of about 2.5 per cent.
In addition, the tax will not be applied to the lot, only the unit itself.
While the owners won't pay as much as first thought, the extra costs will mean things like renovations to homes or businesses, even new builds, could amount to thousands of extra dollars in many instances.
Now, it's hard to predict exactly how this will play out, most of us tend to think it won't affect buyers a whole lot. We will likely see a hike in new build prices, and will also could see more of a demand for resale properties, as there will probably be a bigger price gap than we saw previously.
If you guys have any questions about how this might impact you as a buyer or seller, make sure to let us know! I will also happily answer the PST questions regarding the increased PST on booze :).