GST cut will aid new homebuyers

Mac Olsen
South Peace News

The federal government’s decision to lower GST will prove to be a significant benefit to homebuyers and construction companies in the next year. Those who are in the market to purchase newly constructed homeswill pay one per cent less in GST. This will also result in lower input costs for construction companies. Finance Minister Jim Flaherty announced on Oct. 29 that the Stephen Harper government would reduce the GST from six per cent to five per cent effective Jan. 1. The same government reduced the rate from seven per cent to six per cent when it came to power in 2006. “It’s going to make some difference for new home buyers,” says Gord Olson, who operates the Sunnyside Realty Century 21 office in High Prairie. Olson says that the GST applies to new homes, bare land and commercial/industrial property. Contractors will benefit due to lower input costs, he adds. Olson doesn’t believe that the rate cut will have a major impact on new commercial/industrial construction, or on new home sales. What drives the housing market is the interest rate, he says. Olson adds that those who buy new homes receive a rebate of 30 per cent on the GST they pay. For example, someone who buys a new $300,000 home will have to pay $15,000 in GST based on the five per cent rate, but they will receive $5,000 of that back. The GST doesn’t apply to existing homes, but it does apply to renovation work, and no rebate is offered for this. Ken Cox, owner of Cox Building Company in High Prairie, welcomes the GST rate reduction. “It definitely improves our sales ability. One per cent makes a difference in the sale price of a home,” says Cox. He also says his company is still benefiting from the first one per cent rate reduction in 2006. His company is building several homes on speculation right now, and plans to start work on new ones. Cox has all the construction workers he needs. He adds that next year looks promising for housing construction in High Prairie. Kerrie Patrick, a mortgage specialist for the Royal Bank of Canada branch in High Prairie, says there is the potential for increased sales of new houses due to the GST rate reduction. Patrick adds that 100 per cent financing is available for homebuyers, but their credit history has to be excellent. Contact her at 523-4514 for more information.

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