Housing Department Pushes for Extension of Home Buyer’s Tax Perk
The Department of Human Settlements and Urban Development (DHSUB) appeals for the extension of the existing tax perk to purchase residential units worth ₱2 million and above for next year.
DHSUB Secretary Eduardo Del Rosario sent a letter to Department of Finance (DOF) Secretary Carlos Dominguez III stating that the extension aims to keep housing prices affordable amid the pandemic-induced recession.
Del Rosario sought to retain the existing value-added tax (VAT) exemption on the sale of low-cost housing and house-and-lots within the ₱3,199,200 threshold.
Starting January 1, 2021, the VAT exemption under the Tax Reform for Acceleration and Inclusion (TRAIN) law will only apply to socialized units, house-and-lots, and other residential dwellings sold between ₱2 million and below.
Del Rosario expressed that “[The lower tax-exempt] will surely have a significant impact on the sales of real properties intended for low-income buyers.”
He added that DOF should review this specific TRAIN Law provision in efforts to keep housing affordable.
Del Rosario continued that, “To a reasonable extent, our developers can make use of the tax savings from retention of the VAT-exemption threshold beyond Jan. 1, 2021. Our home buyers will be the ones to ultimately benefit from any kind of fiscal incentive even in the form of tax relief herein prayed for, especially during this time of crisis.”
The provision will also affect housing developers as they struggle to restart their business and find ways to account for the increased costs of development and construction due to the existing health protocols of COVID-19.
On Saturday, November 14, Del Rosario announced that he and Dominguez had met and discussed the housing sector’s concern, but no formal commitment nor written directive has been made yet.