From July 1, 2022, gradual abolition of income tax refund system for  mortgage loan starts in Yerevan

ArmInfo.The National Assembly of Armenia on November 17 in the second and final reading adopted the government's bill on the gradual abolition of the income tax refund  system on mortgage loans in Yerevan.

According to the initiative, the benefit under the program will be  canceled from July 1, 2022. From that moment on, income tax will not  be returned to those citizens who decided to buy an apartment on a  loan in the 1st zone of Yerevan (center) and received a loan for it  after this period. From January 1, 2023, the income tax refund will  be canceled for those who purchased housing in the 2nd zone, from  July 1, 2023 in the 3rd zone. A 1.5 year break is then offered. The  other zones of Yerevan have a precondition for getting a mortgage  loan by January 1, 2025.

The proposed restrictions will apply to individual and multi-unit  residential buildings built on the basis of building permits issued  after January 1, 2022.

It should be noted, that he program has been in force since November  2014:  citizens who purchase housing on mortgage lending in the  primary  market (apartments in new buildings or new private houses)  receive an  income tax refund in the amount of interest on the  mortgage. In 2017,  the financial authorities of Armenia stated that  the legal norm was  aimed at creating a stable and effective demand  in the field, as well  as solving social problems. As a result, it  was noted that the social  component was negligible. The Ministry of  Finance monitoring revealed  that more often the legal norm is used  by those who do not have the  goal of solving social problems, but  only enrich themselves by acquiring another real estate. As a result,  from January 1, 2018,  interest is not compensated for transactions  exceeding 55 million  drams (about 115 thousand dollars).  The second   limitation concerned  the amount of income tax that the state  returns to the "mortgagee" -  within the framework of one transaction  no more than 1.5 million AMD per quarter, regardless of the number of  borrowers or co-borrowers.  For a young family, if a couple acts as a  borrower and a co-borrower,  this means that the monthly maximum  amount of income tax in the form  of a return from the state  treasury, which they can claim, is 500  thousand AMD (in proportion  to their monthly joint income of 1.6 or  1.7 million drams). And,  thirdly, it was decided that from January 1,  2018, the preferential  program can be used only once, whether it is a  borrower or a  co-borrower.  The next changes to the tax code of  Armenia were  approved at a government meeting on August 12. 

As Minister of Finance of Armenia Tigran Khachatryan noted, this   initiative is aimed at equal territorial development through the   income tax return program and giving to it a more clear social   character. As the head of the Ministry of Finance noted, in the past  two years the number of beneficiaries of the program has increased   dramatically. So, if in 2015-2017 the beneficiaries of the program   were 800 people, in 2018-2019 - about 2000, and in 2020 - already   5200. Now the total number of beneficiaries exceeds 16 thousand   people, of which only 7% are in the regions. It is predicted that by   the end of the current year the number of beneficiaries will reach 17   thousand people.  Accordingly, budgetary allocations have also   increased. In particular, in 2015, the borrowers (co- borrowers)   under the program were reimbursed in the amount of 273.9 million   drams, in 2016 - 1.3 billion drams, in 2017 - 2.4 billion drams, in   2018 - 4, 7 billion drams, in 2019 - 7.9 billion drams, in 2020 -   13.3 billion drams, and in 7 months of this year the amount reached   15.3 billion drams, and by the end of 2021, allocations will amount  to about 21 billion drams.