If you are planning on buying a new home over the next two years, then you need to know about the 2% BC Transition Tax.

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.

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

The 2% BC Transition Tax applies to the full price of a new home, which is 10% or 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.

For newly built homes where construction begins before April 1, 2013, but ownership and possession transfer afterwards, purchasers will not pay the 7% provincial portion of the HST. Instead, purchasers will pay 5% GST and the 2% Transition Tax on the full house price. 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 Beacon score or credit score determines the probability that you will pay your bills on time and in full. Beacon scores are sometimes referred to as FICO scores, and both names are from the credit bureaus that developed the scoring. Keeping track of this important number is vital. Inquiries to your score are recorded and tracked on the credit report.

Credit Inquiries

• Every time that you, a creditor or potential lender checks your credit report, a record is created of the event. This record appears on the bottom of the credit report. There are two types of inquiries, soft and hard. A soft inquiry occurs when you pull your own credit report. Credit card companies also pull soft inquiries when marketing pre-approval offers. A hard inquiry happens when submitting loan or credit card applications. A hard inquiry is one that is triggered by the applicant; a lender cannot process a hard inquiry without your permission. There is a process to have non-authorized credit inquiries removed from your report.

Affects on Your Score

• Soft inquires do not affect the credit score. A consumer can pull their own credit score as many times as they wish without repercussions. Hard inquires affect the score slightly. These inquires are included in the calculation done for credit scoring. Usually they account for 10% or less of the overall score. Multiple inquires that occur in a 14-day span are counted as just one inquiry. This helps those who are credit shopping (mortgages, personal loans etc…) and need to have their credit pulled several times. Multiple inquiries are rarely the reason that people are denied credit unless the score was borderline to start with.

Recording Inquiries

• Recording the number of inquires a consumer has on the credit report allows potential lenders to see how often a consumer has applied for new credit. This can be a precursor to someone facing credit difficulty. Too many inquiries could mean that a consumer is deeply in debt and is looking for loans or new credit cards to bail themselves out. Another reason for recoding inquires is identity theft. Hard inquires not made by you could possibly be an identity thief opening accounts in your name.

Time Frame

• Inquires are required to remain on the credit report for at least a year. Most creditors, however, disregard any that have been on the report for over six months. Hard inquires remain on the report for two years. Soft inquires only appear on the report that you request from the credit bureaus and will not be visible to potential creditors. Hard inquires appear on all credit reports. All inquires disappear from the report after two years.

Who Has Access

• Only individuals with a specific business purpose can check your score. Creditors, lenders, employers and landlords are some examples of approved business people. The inquiry only appears on the credit report that was checked. For example, if a landlord uses Experian to check the creditworthiness of an applicant, the credit check will only appear on Experian’s report, not TransUnion or Equifax. To limit the number of soft inquires made on your credit report, contact the credit reporting agencies and request that they remove your name from marketing distribution lists.

Contact me at 604 616 2266, mhallett@dominionlending.ca @Hallettmortgage www.michaelhallett.ca

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