ArmInfo.Armenia's authorities are phasing out the income tax reimbursement programme for mortgage loans Armenia's Minister of Finance Vahe Hovhannisyan said the government proposes narrowing the territorial and time frames.
In particular, it is expected to establish that after January 1, 2027, income tax on mortgage loans on the primary market is not refundable if the property is located in the regions adjacent to the city of Yerevan - Aragatsotn, Ararat, Armavir and Kotayk. From January 1, 2029, tax refunds will no longer apply in other areas. Restrictions will not apply to border settlements.
In addition, for mortgage transactions from January 1, 2025, the total amount of refundable income tax to the substitute or co-borrower cannot exceed 750 thousand drams per quarter.
Prime Minister of Armenia Nikol Pashinyan, in turn, said that since 2018, thanks to this program, more than 35 thousand families have purchased an apartment. In 2022, about 35 billion drams in taxes were returned to citizens (90% for mortgage payments).
The program has been in effect since November 2014: citizens who purchase housing using mortgage lending on the primary market (apartments in new buildings or new private houses) receive an income tax refund in the amount of mortgage interest. In 2017, the financial authorities of Armenia stated that the legal norm was aimed at creating stable and effective demand in the sector, as well as solving social problems.
Meanwhile, the social component turned out to be insignificant, and state treasury expenses increased sharply. As a result, from July 1, 2022, a gradual abolition of the income tax refund system on mortgage loans began in Yerevan. It was noted that from this moment the income tax will not be refunded to those citizens who decided to purchase 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, income tax refunds were canceled for those who purchased housing in the 2nd zone, and from July 1, 2023 in the 3rd zone. Then a 1.5 year break is offered. For the rest of the city of Yerevan, a precondition for obtaining a mortgage loan was established by January 1, 2025.
As the deputy head of the State Revenue Committee of the Republic Artem Smbatyan reported on November 8, in January-September 2023 the state returned income tax to "mortgage holders" in the amount of 37.5 billion drams (about $93 million). According to him, IT employees received 22.3% of these payments or 8.3 billion drams, while civil servants received about 3 billion or 8.2%.
