Property developers fear low-cost housing units may become out of reach of many Filipinos if the government pushes through with a plan to further tax house and lots that cost up to P2 million.
A 12-percent value added tax (VAT) is set to be slapped on house and lots that cost up to P2 million starting 2021.
According to the Chamber of Real Estate and Builders’ Associations, Inc. (Creba), lots costing up to P1.9 million and house and lots that cost up to P3.2 million are currently VAT-exempt.
These thresholds, Creba said, were based on 2011 economic conditions and the consumer price index.
The Tax Reform for Acceleration and Inclusion (TRAIN) law exempted these property categories from VAT for three years.
By January 2021, however, the cap for VAT exemption will be lowered to P2 million.
Since property assets at this price range are usually bought through long-term loans, then the VAT would not have a one-time impact on the consumer.
Creba chair Charlie Gorayeb said a housing unit sold at P3 million has a 12-percent VAT of P360,000 per unit, which then translates to P1 million over a 30-year mortgage life.
“VAT is a buyer’s tax which real estate developers have no choice but to fully pass on to homebuyers. And because a once-in-a-lifetime housing purchase at the range of P3.2 million and below is usually availed of under a long-term loan, the VAT burden is not a one-time impact,” Gorayeb said.
This, the group said, is seen to affect the housing plans of millions of overseas Filipino workers and low-income earners.
Moreover, Creba national president Noel Toti Cariño said the added VAT would stifle the growth of the sector.
“Whatever estimated collection from the additional VAT on housing is not realizable as we expect a massive industry slowdown when buyers can no longer afford to buy and developers can no longer afford to build for lack of qualified takers,” he said.
The two officials appealed to lawmakers to leave the current tax system unchanged. —ROY STEPHEN C. CANIVEL