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Will Guatemala Take The Medicine? Experts Say Removing the VAT on Home Purchases is The Remedy

Article Summary:

Eliminating the collection of the Value Added Tax on home purchases in Guatemala would benefit the emerging middle class, say experts, as well as have positive effects on the sector by reducing closing costs and increase registration of properties. Time will only tell if the government of Guatemala believes the same.

Photo Credit: Revista Summa

Original Article Text From Revista Summa via Google Translate :

Guatemala: Remove VAT on Home sales would Boost the Property Market

The housing deficit exceeds 1.2 million units in the country, but Guatemalan families facing high costs for access to a new or “used”.

For several years we have a consensus on the need to eliminate the collection of Value Added Tax (VAT) to transactions in the housing market, says Hugo Maul, director of National Economic Research Center (CIEN), referring to the tax reform promoted by the government of Otto Perez.

The initiative proposes to amend the tax update VAT law to exempt from this payment to taxpayers after the second and subsequent sale of property and replace it with a rate of 3% would be paid by revenue stamps.

The 12% rate currently applied is very expensive and almost no country applies Maúl explained. Levy the 3% Stamp Tax is an important step that helps to formalize the deed and streamline the real estate market, said the economist.

Leonel Fernandez, representing Rossul Group, said the exemption should apply from the first sale, however, believes it is positive the approach to waive the VAT from the second transaction.

Couples who purchased their home recently married and with a more limited budget, if implemented this reform may sell their home more easily and buy one that fits your current needs without the buyer having to pay VAT on the property , said Fernandez.

“We see small houses up to three levels by the need of space for children,” said the developer to refer to another effect will be favorable to the growth of ordered structures.

As Unfair
In this regard, Edgar Balsells, former Minister of Finance, believes that eliminating the collection of VAT mainly benefits the banks and real estate developers in the past have advocated such a measure.

With the proposed reform, banks can expedite the sale of homes they have left in the portfolio because buyers can no longer meet the payments, said the economist.

For the proposal to be fair we should eliminate tax only in homes less than U.S. $ 44,961, which are that you access the middle class and stop the collection or rank for luxury housing, luxury residences and vacation homes in the harbor must pay VAT Balsells concludes.

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From Revista Summa

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