BUYERS of low-cost housing will be paying more if the value-added tax (VAT) exemption on low-cost housing is lifted, an official of the Chamber of Real Estate and Builders’ Association, Inc. (Creba) said.
As part of the Tax Reform for Acceleration and Inclusion (Train), the Department of Finance proposes for the lifting of VAT exemption for low-cost housing, residential lots, and lease of residential units amounting to P12,800.
“While the housing packages as sold by the developers might not increase but the total amount shelled out by the buyer will increase by, not even only 12 percent, but so much more because the money they pay for purchasing a house will have also to bear the interests especially when these loans are made for long periods of time especially for our overseas Filipino workers (OFW),” said Creba executive director Sharmin Albacete.
She said the probable VAT on housing will definitely affect the affordability levels of the real estate properties as the VAT will not be paid by the developers but by the buyers as an after-sales tax.
Albacete added their organization will not anymore request for any tax relief or any incentive as they believe DOF had already been looking into the current housing incentives and might plan on scrap them in the future.
In 2011, Creba was part of the body that pushed for the VAT exemption of houses amounting up to P3.2 million due to prevailing economic condition and the rise of construction materials among other factors. Prior to this only houses amounting up to P2.5 million were given VAT exemption.
“While P3.2 million might be a big amount already, but this is hardly the kind of housing unit that is afforded (only) by the rich. Because OFWs can already afford these kinds of packages but they have to have financing assistance. Meaning, they really have to depend on long-term loans. When you impose VAT on these packages, the resulting increase in the expense on the OFWs and low-income earners would stretch even surely beyond 12 percent because of the finance cost,” she added.