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Latin America Investment News on Viva Tropical

New Laws for Guatemala Housing Market

Article Summary:

The recent package of tax regulations passed in Guatemala includes modifications in determining the taxable value for the sale of a property and holds the potential to impact property values in the country.

The Impact of New Laws on Property Values

As I’ve been counting, Guatemala has passed several laws in the tax reform promoted by the Executive, including Decree 10-2012, which includes: “For the testimony of the deed which documents the second or subsequent sales or exchanges of real estate, the tax base is the greater of the following: 1 – The value entered by those who sell, exchange and acquire, under oath, in the deed. 2 – The value set by a licensed appraiser or 3 – The value entered by the taxpayer in the tax or municipal license plate. ”

Note that in the first paragraph indicates that the seller must declare under oath the value you are selling. So the legal entity or person in particular, may declare the total value of the sale as it is under oath and think that going to declare the true value, so will probably be higher. Then you must file an appraisal performed by licensed appraiser, traditionally, in terms of valuations for the Treasury, has been used to develop one based on the values ​​that drove the Department of Cadastre and Real Estate Appraisals DICABI, Ministry of Finance, normally have been low. Then request a certificate of tax registration in DICABI, and finally go to the municipality to apply for enrollment Single Property Tax (IUSI).

After obtaining these four documents, submit them to the notary to draw up the deed, who probably entered the highest, or that the seller shall make the requested testify under oath. If it is the second or subsequent sales or exchanges, then pay to the Treasury, 3 percent of the highest value, regardless of the value declared by the seller.

Then the Land Registry, regardless of the other three values, it will take to register the highest seat in the respective book. The next step is that institutions send the respective notices, both DICABI, and the IUSI of municipalities so that if your records are below this value, operate the new, higher, they entered.

Now let’s look at some possibilities: first that the appraiser wants or agrees to perform the appraisal below market values ​​invoking the Appraisal Manual which states that for purposes of IUSI appraisals, could apply the 75 percent discount to the market value. This is not possible since, according to the law, this reduction only applies to assessments for the purposes of IUSI to the municipalities and not for other tax purposes, therefore it rejected in DICABI.

Second, assuming that somehow get an appraisal less than the actual value of the sale, the buyer might be tempted to suggest that this value Deed to reduce the payment of taxes.

We will post an example, assuming that the agreed value is the valuation thousand and Q600 Q200 indicates thousand. The seller then the lesser states and get a cashier’s check for Q600 thousand, or other document that transfers to a bank. According to the law against tax evasion, the bank or otherwise, will be asked to fill out a statement on the source of funds and here comes the problem. The document covering this sum of money is the deed of sale, and this indicates much less than what is deposited. Then the bank or financial institution, by law, to review the documents and note the differences, will present this anomaly to the Public Prosecutor and the person must explain why, under oath, committed falsehoods.

The consequence of these new laws and reforms will be shelling out more money in taxes for the purchase of housing solutions. The impact to property values ​​will be short term, as stated earlier usually much less in the scriptures, and the buyers and sellers adjusted their values ​​to this small amount of taxes. The problem is that the value of the property is directly related to ability to pay of buyers, so if these values ​​are increased, many people do not have access to housing solutions. Questions?

Link to Original Article:

From Prensa Libre

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