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Way clear for new homeowners to apply for mortgage relief

Oct 17, 2013 News

The way has been cleared for first time homeowners to claim for relief on their mortgage interest from the state-owned tax agency.
Inviting applications for the mortgage interest relief (MIR), the Guyana Revenue Authority (GRA) said that documents will have to be filed before the end of the year at its offices.
The relief, which effectively allows part of the taxed income of homeowners to be applied to the mortgage payments, was announced earlier this year by Finance Minister, Dr. Ashni Singh, during his presentation of his budget speech for 2013. At that time, he said that the measure was effective for this year of income.
While none of the monies will actually end up in the hands of homeowners, what MIR will do is on the long term reduce the interest to be paid, and the repayment period.
Last week, Government announced that the Finance Minister has signed the regulations and was urging the relevant agencies like GRA to start implementation.
Minister Singh, during his budget speech, had explained that first time homeowners who are holders of mortgage loans of up to $30M granted to them by commercial banks or the New Building Society will be permitted to deduct the interest they pay on such mortgages from their taxable income for the purposes of personal income tax.
“In other words, that portion of taxable income used by a first time homeowner to pay interest on a housing loan of up to $30M from a commercial bank or the New Building Society will be exempt from personal income tax.”
This initiative would have cost Government approximately $580M annually, Dr. Singh said.
According to GRA in its notice yesterday, “Mortgage interest Relief (MIR) is a reduction of the interest to be paid on housing mortgage loans owed by individuals, who are resident in Guyana to financial institutions or approved mortgage finance companies.
The implementation of the Mortgage Interest Relief Provision, will take effect from the Year of Assessment 2014, therefore, relief of thirty percent of the total mortgage interest commencing January 1, 2013, will be granted to first time homeowners who would have acquired mortgages on or before January 1, 2013.”
MIR, GRA, explained is applicable to persons who have acquired property, purchased land for residential construction, using mortgage financing.
The applicant will have to produce a letter from an approved lending institution (commercial bank or NBS) that a mortgage has been granted below $30M.
Among other things, the homeowner will have to, using GRA forms available on its website, provide a copy of the transport/title; copy of sale and purchase agreement, if applicable, and the agreement with the lending institution.
Applicants who jointly own a property can nominate one applicant to receive the MIR.
“Upon presentation of the approval from the Commissioner-General, the approved lending institution will reduce the interest payable on the eligible mortgages by 30%, which is equal to the rate of income tax in force.”
To spur home ownership, Government has in recent years introduced a number of measures, including tax waivers to lending institutions to lower interest rates.
From a one time high of over 30%, mortgage interest rates have fallen to over four per cent, leading to a significant lending being increased in recent years. This in turn has led to a boom in new homes being constructed.
Housing has been a major contributor to the economy in recent years as satellite industries like block-making, transportation and other services like security grills installation sprung up.

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