New homes will be eligible for a tax rebate when B.C. adopts the HST next year. (CBC)The B.C. government is raising the maximum value for new homes that will get a rebate on the provincial portion of the coming HST.

Under the proposed changes the threshold for the new housing rebate on the harmonized sales tax will increase to $525,000 from $400,000.

The decision means home buyers will receive a rebate of 71 per cent of the provincial portion of the HST paid on a new home, up to a maximum of $26,250.

'This increase will move the threshold to above the average new home price in the province— Finance Minster Colin Hansen

Finance Minister Colin Hansen made the announcement Thursday, saying the move represents the highest maximum provincial rebate in Canada.

"We heard the concerns from consumers and industry about how the HST might affect home buyers, and this increase will move the threshold to above the average new home price in the province," said Hansen in a statement released on Thursday morning.

The HST takes effect on July 1 next year and the province is also proposing new rules to ensure the provincial portion of the HST would not apply to the sale of new homes where ownership or possession is transferred before that date.

In addition, sales of new homes under written agreements of purchase and sale entered into on or before Nov. 18, 2009, would generally not be subject to the provincial portion of the HST, even if both ownership and possession are transferred on or after July 1, 2010, officials said.

The HST will replace the GST and PST on all goods and services sold in B.C. with the single harmonized tax of 12 per cent. Currently there is no provincial sales tax on new homes.

With files from The Canadian Press