Housing Developers urges BIR to suspend VAT on low-cost housing projects
In light of the Covid crisis, the housing and real estate developers are urging the office of Bureau of Internal Revenue (BIR) to consider the suspension on the imposition of the value added tax (VAT) on low-cost housings that will take effect on 2020.
The Chamber of Real Estate and Builders’ Associations Inc. (CREBA) urged the BIR to issue a ruling suspending the imposition of VAT on low-cost housing units immediately as the three-year reprieve under the Tax Reform for Acceleration and Inclusion (TRAIN) law for low-cost housing ends by December 2020. Under this TRAIN law, homebuyers of P1.9 million-worth residential lots and P3.2 million-worth house and lot units are exempted to pay VAT. By the start of next year, only those worth P2 million and below would be VAT-exempt.
The Chamber of Real Estate and Builders’ Associations Inc. (CREBA) urged the BIR to issue a ruling its suspension with Filipino homebuyers who are struggling to purchase their homes due to the crisis in mind.
According to CREBA, there is a 6.57 million units housing backlog and that there is an increasing by 300,000 units per year gap between supply and demand.
Charlie Gorayeb, CREBA National Chairman, said that imposing VAT on low-cost housing would make the prices go up and making it hard for Filipinos homebuyers to purchase their desired homes. “Real estate developers have no choice but to fully pass on VAT to homebuyers. When obtained through a long-term loan, the 12 percent VAT of about P360,000 for a P3.2 million home actually translates to P1 million over a 30-year mortgage life,” he said. Gorayeb said that to make it necessary for Filipino families to have decent homes, there should be a fixed, low-interest long-term housing loans from the government.
Noel Cariño, CREBA National President, added that these additional taxes that will be collected by the government from housing will not help the slowdown of the real estate sector during this crisis. “But with housing being globally-recognized for its economic multiplier effects, a robust housing industry will be a primary catalyst for economic recovery to help the entire country heal as one,” he said.
A founding member and blogger of Filipino Homes. Lai Marie is a digital creative sharing helpful and useful travel tips at Pinay Travelista and sharing life hacks and stories on her You Tube channel.