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.
