[Sylvanfan]

On a new home that is your primary residence and costs 350k or less you can get a GST rebate of 36%. Essentially on a new house up to 350,000 in value you pay a GST of 3.84%. How it works it that your maximum GST rebate is caped at 36% of 21600 tax (6% of 350k) which totals $7560 (essentially 350x.06x.36). So a 350k house with GST is 363440.

Now for every $1000 of value above 350k, your maximum rebate number comes down. So for example on a 400k house you pay the full 6% tax which is 24 grand. But your rebate is 50% of the $7560 amount or $3780. So on $400k house you would pay $21220 in GST or 5.3%. So essentially in that 50k price difference you're paying an extra $7780 in tax. So the real cost of that 50k difference on a new home isn't 50k or 53k with tax, but more like 58. At 375 k you paid 391830 total or 4.49%GST, and at 425k it's 5.56% GST you pay. Most builders are hiding these numbers in their costs, but I think it's a factor in why costs shot up as much as they did. Not only was the price of the house increasing, but the tax at 350 is on an imbalanced curve until the price reaches around 400k.

The thing is that in 1991 when they devised these values it maybe applied to 10% of the houses in the country. Now days when you consider that Toronto, Vancouver, Edmonton, and Calgary which represent 5 of Canada's 6 largest markets boast an average house price above that 350k threshold, they should adjust that number for GST on new housing to be like 650k. Take that 350k number index inflation at 4% and thats the amount you end up with. Back in 1991 they said they'd index that with inflation.