One of the most expensive purchases you will ever make is buying a home. Although it may seem daunting, many tax benefits are available for first-time homebuyers. Many first-time homebuyers are unaware of their tax benefits when buying a house. Well, if you have plans to buy a home for yourself, it is highly recommended that you talk to an accountant or a financial advisor and discuss the available tax benefits.
The government has several schemes and policies to make buying homes more affordable. These schemes are mainly aimed at first-time homebuyers. If you borrow money to buy or build a family home, you can deduct the mortgage interest from your taxable income. Sonny Angara, a senator, introduced Senate Bill No. 2148 to address this issue. It proposes tax breaks for qualified first-time homebuyers in mortgage interest deductions.
Explanation of the Bill
According to the bill’s explanatory note, a home provides a person with a sense of security and stability. However, many people rent rather than buy their own homes, not because they want to, but because they don’t have a choice.
Houses are indeed a substantial financial burden. As per a recent study by the National Economic and Development Authority’s Statistical Research and Training Center, 1.5 million of the 21.5 million Filipino households are renters.
According to the bill’s author, many developers currently offer reasonably priced housing options with easy payment terms and low down payments for homebuyers. However, Angara pointed out that financing is still one deterrent to homeownership. High-interest rates charged by developers and banks deter many potential homebuyers from purchasing. As a result, the senator proposes this new bill, which will provide a tax break to people who want to buy a home.
How Will the Bill Benefit Filipinos?
One of the bill’s standout features is the Home Mortgage Interest Relief. It intends to provide tax breaks to individuals who purchase a home. The bill’s goal is to assist Filipino families in finally purchasing their first family home. As a result, any interest paid on loan to acquire or construct a family home during a taxable year is deductible from your gross income.
Furthermore, when this bill becomes law, it will eliminate the interest rates on your loan. As a result, you will only be required to pay the principal amount of your property. This means you will no longer need to worry about increasing interest payments. Furthermore, you will benefit from tax savings due to this relief.
The bill intends to encourage more lenders to provide affordable financing to first-time homebuyers who are the most in need of shelter.
Senator Angara hopes that this legislation will address the country’s housing shortage, which is currently estimated to be 3.9 million housing units. It hopes to persuade more lenders to provide affordable financing to first-time homebuyers who are the most in need of shelter.
However, once enacted, the law will only cover loans that meet the following criteria:
- Loans from reputable Philippine banks, the Home Development Mutual Fund (Pag-IBIG), and duly approved cooperatives.
- Loans that are used solely to construct or purchase a family home.
- Loan amounts not exceeding Php2.5 million.
As a first-time homebuyer, you have to take advantage of the tax benefits that come with buying your home. The government is offering attractive tax breaks to those who buy their own homes, and it’s only fair that you make use of these breaks. Take some time today to learn more about how you can avail of tax benefits when buying homes in the Philippines.