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In an article published earlier this week, The Association of Professionals in the Construction and Habitation du Québec (APCHQ) voiced its concern about the proposed removal of QST rebates for new housing in Quebec. As many first time buyers may know, QST rebates are currently available to individuals who have simultaneously purchased land and property from the same builder, under a single contract of sale, and in cases where the builder did not reimburse or credit the buyer with a GST and QST rebate.
The request made by the Commission Godbout to end the government’s allocation of QST rebates for new housing was part of an objective to optimize Quebec’s taxation policies and stabilize public finances. Despite recognizing the need for such an initiative, the APCHQ warns that this proposal will have serious, adverse effects on Quebec’s housing sector, which is already weak in respect to other Canadian provinces.
It requests that the government clearly reject the idea of ending the QST rebate, for two reasons:
Firstly, access to property and homeownership for young families is already a major issue in Quebec. Only 61% of Quebec households are homeowners; 10% less than the average amongst the Canadian provinces. To provide some context, a buyer must currently pay $20,000 in provincial taxes in Quebec for a new home valued at $250,000, whilst a buyer in Ontario need only pay $5,000. The Director of Communications at the APCHQ, William Francis Simard, warns that the delay for young Quebecers to obtain homeownership may persist or be further aggravated with the abolition of QST rebate for new housing.
Secondly, the expenses related to the new housing market represent nearly 8 billion annually, a figure which constitutes a hefty contribution to the provincial government. Ending the QST reimbursement would risk significantly reducing the construction of new housing, thus depriving the government of a large portion of their direct and indirect annual taxes.
The APCHQ asks that changes to provincial tax redistributions be made pragmatically. It is essential to help young families gain access to homeownership, and to continue supporting the new housing market that contributes to the Quebec economy. “That is why we hope that the government will reject the recommendation of the Commission Godbout,” says Simard.
For those who are unfamiliar with concept, let’s take the example of one of our properties eligible for a QST rebate.
70 Ferdinand, a new construction in St Henri, is priced at $249,900 (tax in).
The purchase price before taxes would then be: 227, 223.16 $
TPS (purchase price x 5 %) would be: 11 361.16 $
TPS Rebate for the property would be: $4,090.02
TVQ (purchase price x 9.975%): $22,664.51
TVQ Rebate for the property would be: $7,259.81
Total amount reimbursed: $11,349.83
Net Price after taxes and rebates: $249,900
Price without rebates: $261, 249.83