British Columbia HST Implications

Posted by admin on August 28, 2011

Is There BC HST on Rent? Other Indirect British Columbia Harmonized Sales Tax Implications and the BC HST Impact on Vancouver Rents

Many renters have asked us this question already: Is there BC HST on rent in Vancouver and around the province? Does BC HST impact rental housing rates and what are the implications and impact of the British Columbia Harmonized Sales Tax on rents and rental rates in major cities where vacancies are still at record lows? To answer your questions as simply as we can, there is no direct BC HST on rent in the province. Therefore, a landlord or property owner renting their home or condo to renters DO NOT charge 12% BC HST on Vancouver rents. Basically, what you see is what you get in terms of BC rental pricing.

HOWEVER, because of the implementation of the BC Harmonized Sales Tax in July 1st, 2010, there is an indirect effect of the 12% HST on rents in Vancouver and throughout British Columbia. Not only will the B.C. HST impact residential housing rents, but it will also ultimately affect commercial rents next year. Again, these is no BC HST on commercial rents directly. However, the commercial property owner will have their hands tied as the 12% new tax will be applied to all operation costs, maintenance issues, renovations and professional services. What this means is that the BC HST on commercial rents will increase indirectly due to the increase tax burden on the British Columbia commercial property owner. In this article, we will try to examine the negative impact of the BC HST on rent, even though it is indirect.

THE BC HST RENT IMPACT IS TWO-FOLD, AFFECTING BOTH RENTERS AND LANDLORDS. THE IMPLICATION OF THE BC HST ON VANCOUVER RENTS WILL CAUSE RENTAL RATES IN BRITISH COLUMBIA TO INCREASE. THIS WILL RESULT IN A DECREASE IN HOUSING AFFORDABILITY FOR RENTERS, LANDLORDS AND HOME OWNERS.

Firstly, we will try to explain what HST actually is. HST stands for Harmonized Sales Tax and BC will become the fifth province in Canada to adopt the harmonization of their provincial sales tax and the federal GST tax after Ontario, Newfoundland/Labrador, New Brunswick and Nova Scotia. By doing so, the two taxes will be combined or harmonized into a single sales tax that is equal to 12% (twelve percent). The BC government has confirmed that there is no BC HST on rent applied to rental housing in Vancouver or anywhere else in the province. What this means is that if you are renting a two bedroom condo in Vancouver costing $1,000, you are paying $1,000 and not $1,000 plus 12% HST. However, this does not mean that Vancouver rents won’t be affected by the British Columbia Harmonized Sales Tax as we will explain directly below.