B.C. will scrap the HST and return to the PST on April 1 2013, Finance Minister Kevin Falcon announced on Friday in Victoria.
Until that time new home buyers will be able to take advantage of expanded rebate program and a transitional tax designed to ensure that there is no tax difference whenever they choose to buy their home — provided it costs $850,000 or less.
"The B.C. new housing rebate threshold will be increased to $850,000, meaning more than 90 per cent of newly built homes will now be eligible for a provincial HST rebate of up to $42,500," said a statement issued by the Ministry of Finance on Friday.
"The housing transition rules help ensure when people buy a newly constructed home under the PST, whether built entirely under the HST, entirely under the PST, or partly under HST and partly under the PST, they will all pay a consistent and equitable amount of tax."
The government also rolled out a new grant designed to encourage people to buy vacation homes outside of Metro Vancouver and Victoria.
"In addition...purchasers of new secondary vacation or recreational homes outside the Greater Vancouver and Capital regional districts priced up to $850,000 will now be eligible to claim a provincial grant of up to $42,500 effective April 1, 2012."
Falcon said he expects the new rules will bring certainty to new home buyers and the building industry.
"The relief measures announced today are a boost to home buyers purchasing either a new primary residence or a secondary home. At the same time, they help an important job-creator in all parts of the province."
The move was welcomed by the homebuilding industry on Friday.
More details on how the transition back to the PST will affect other goods and services will be rolled out later this spring.
"For goods and services that will be subject to PST, PST will generally apply where tax becomes payable on or after April 1, 2013."