Senator wants tax incentives for first-home buyers

Rappler.com
Senator Juan Edgardo 'Sonny' Angara believes that the government should help Filipinos attain their dream of owning their first home

TAX INCENTIVES. Senator Juan Edgardo 'Sonny' Angara believes tax incentives would encourage more Filipinos to buy their own homes.

MANILA, Philippines – A neophyte senator wants the government to help more Filipinos acquire their first homes through tax incentives.

Senator Edgardo Angara, chair of the Senate ways and means committee, filed Senate Bill No 2148 or the Home Mortgage Relief Act of 2014 which seeks to provide tax incentives to first-time home buyers through home mortgage interest relief, an individual income tax incentive.

In his explanatory note to SB 2148, which seeks to amend National Internal Revenue Code of the Philippines, Angara said that real estate developers have been offering affordable payment terms of potential home buyers, yet there are not as many takers because of the “financing aspect” of the process.

“The only remaining deterrent faced by would-be buyers is the financing aspect, more specifically, the interest rates imposed by banking institutions and by these developers themselves. This is where the government should step in by providing an incentive to those who would be purchasing their first family home,” he said.

Under the proposed measure, homeowners would be allowed to deduct the interest they pay on a qualified mortgage loan used for the purchase or construction of their first family home.

“By removing interest rates in the equation, potential homeowners will only have to pay the principal amount of the property, and thus avoid the stress of dealing with ballooning interest payments,” Angara said.

Under SB 2148, a qualified taxpayer must show proof that the the house planned for purchase is a “first family home” with a maximum value of P2.5 million.

A qualified taxpayer may still claim the privileges under the measure if a solo parent, and if the original family home was destroyed due to force majeure or lost due to a valid expropriation by the government.

The claimant must submit all the requisite documents to qualify under the proposal, among them a notarized deed of sale, tax declaration, bank assessment, loan documents, income tax returns and/or sworn statement of assets, liabilities and net worth (SALN).

Angara said the high cost of home acquisition in the Philippines has compeled more Filipinos to rent instead. He cited an initial study of the Statistical Research and Training Center of the National Economic and Development Authority (NEDA) that there are approximately 1.5 million households or 7.2% renters out of the total 21.5 million households nationwide.

“The wisdom of home ownership lies in the simple fact that instead of throwing away money in monthly rents, one’s money can already be channeled into paying for one’s own piece of property. Home ownership will not only ensure the future security of one’s family but can also be considered as a profitable investment,” he said.

The future of the bill hinges on the support of the Department of Finance (DOF) which is traditionally opposed to measures that erode government revenues. 

On Thursday, April 3, the DOF said that revenue losses from the grant of tax incentives had cost government 1.5 percent of the gross domestic product (GDP) in 2011, based on its initial Tax Expenditures Report (TER).

In a statement, Finance Secretary Cesar Purisima said that “tax incentives distort the tax structure of the Philippine economy” and instead called for the passage of the fiscal incentives rationalization and transparency bills. – Rappler.com

Add a comment

Sort by

There are no comments yet. Add your comment to start the conversation.