Real Estate Wins from TT Budget 2020
Every year, the population waits anxiously to hear if taxes will increase, the price of food or gas will skyrocket, or the general cost of living will climb. This year was a different one; waiting amid a pandemic, on how the Budget for the next fiscal year would stimulate the suffocating economy. While we have seen continued activity in the residential segment post-lockdown, the Real Estate sector did contract this year. However, we are hopeful that the concessions and tax exemptions across Housing, Construction and Real Estate will jumpstart the sector for the next fiscal year.
Here are a few wins that we’re excited about:
- Concession on Stamp Duty up to $2m for first time homeowners – To encourage first time homeowners to buy, the government increased the stamp duty threshold for residential properties from $1.5 million to $2 million. This concession, effective January 2021, will purportedly save first time homeowners $28,000 in stamp duty. Hopefully, this measure will help stimulate the demand side of residential transactions.
- Tax breaks for Commercial Developers – Approved property development companies can now claim a tax deduction of 20% up from 15%, of their capital expenditure on commercial, industrial, and multifamily residential projects, completed before December 2024.
- Construction material tax exemption – VAT will be removed on the importation of building materials used in approved housing, commercial and industrial development projects, which start before December 2022. This, coupled with tax breaks for commercial developers will help on the supply side of housing in keeping building costs down.
- No Property Tax until 2021 – The collection of the property tax will not begin until fiscal year 2021 earliest, but we prefer to wait as long as possible for all issues and processes to be settled to have a fair and equitable tax for all stakeholders. The tax will start with residential properties followed by commercial, industrial and agricultural properties.
- State-supported housing subsidy – On the public sector side, all state-supported housing mortgage loans will be a subsidized loan interest of 2 percent over 30 years and with a down-payment of just 5 percent in the higher income brackets and first time homeowners with existing mortgages will be able to refinance their housing mortgage loans.
In the short term until the end of the year, we hope to see continued business in the residential segment. Right now is a great environment to buy; with all-time low mortage rates, many price reductions and concessions for first time homeowners. We believe this will translate to a renewed interest in Real Estate for the medium term as well.
But don't be a bystander! To take advantage of these measures, contact any one of our agents to start your home search.