Minister of Finance Dr. Ashni Singh yesterday signed the Mortgage Interest Relief (MIR) Regulations, announc-ed as a measure in the national budget of 2013 and which will see tax relief granted to first-time home owners who take out mortgages of up to $30 million.
By signing the regulations, the Minister has also sent it
for publication in the Official Gazette.
“At the time of presenting the 2013 National Budget, Minister Singh announced the introduction of MIR with effect from year of income 2013,” a press release from the Government Information Agency (GINA) noted.
The release said that under the newly introduced relief, the Minister stated that first-time home owners who are holders of mortgage loans of up to $30 million from a commercial bank or the building society will be permitted to deduct the interest they pay on such mortgages from their taxable income for the purpose of personal income tax. “In other words, that portion of taxable income used by a first-time home owner to pay interest on a housing loan of up to $30 million from a commercial bank or building society will be exempt from personal income tax,” the Minister said, according to the GINA release.
It said that in announcing the introduction of MIR during the 2013 budget, Minister Singh situated the new measure within the context of the Government’s successes in its housing programme.
The Commissioner General of the Guyana Revenue Authority (GRA) however reserves the right to withdraw his approval of mortgage interest relief and assess the taxpayer for the relief granted to the date of withdrawal where construction is not commenced and materially advanced within 18 months of the granting of approval.
Minister Singh spoke of the ability of the homeowner to participate in the formal financial system with their home as an asset. “Armed with real property as an asset which can in turn be collateralised, the positive consequences for owner participation in the formal financial system, and capacity to borrow to finance asset acquisition or even small business establishment and expansion, have been immeasurable,” he said.
“In addition to our programmes to develop housing areas and distribute house lots, other policies have been adopted to promote home ownership.
These include the special low income housing windows established at the commercial banks under which interest income earned by the banks is exempt from corporate taxes, allowing the banks to offer subsidised interest rates to borrowers of loans for low income housing development,” he said.
The Minister said that coupled with the rapid growth in low income home ownership has been equally rapid growth in demand for middle income housing.
The release said that the introduction of the MIR is expected to cost the Govern-ment approximately $580 million annually, and will benefit tens of thousands of first time home owners, low and middle income alike.
Having signed the regulations, Minister Singh called on the Guyana Revenue Authority (GRA) and the participating financial institutions to proceed to implement the regulations as soon as possible to ensure that the intended relief is delivered to the beneficiary population. The Minister stated that the relief is expected to make home ownership even more affordable and attractive and increase disposable incomes in thousands of households. He said it will also constitute a significant injection of cash into the economy for both savings and consumption, thereby generating and multiplying further business activity.