The Chilean Chamber of Construction (CChC) requested the total or partial elimination of the Value Added Tax (VAT) on the purchase of new homes for a period of at least one year, in order to lower prices in the real estate market.
The initiative – contained within a package of House measures that aim to stimulate housing demand – would help reduce the values of real estate for sale by between 11 and 13 percent, which would improve people’s access to financing and generate new investments.
The tax, implemented in the real estate market since 2016, together with “a series of factors – among which financial aspects stand out today – have considerably affected the purchase of homes in Chile,” indicated Juan Armando Vicuña, president of the CChC. .
This is evident in data from the real estate services company Colliers, which calculated that compared to 2022, the number of homes sold in the Metropolitan Region decreased by 7.4 percent; while compared to 2019, the current level is almost 40 percent lower.
“Along these lines, the proposal to eliminate or differentiated VAT on the purchase of homes aims to negatively impact real estate prices, which in turn would allow families who today want to buy a home to access a more affordable market. “Vicuña added.
Jaime Ugarte, executive director of Colliers, suggested that the VAT “might be paid off as the property is actually paid for,” through contributions.
That is, “initially only pay the VAT on the part corresponding to the foot, since generally a family pays 20 percent of the home and the rest with a loan,” he noted, which might reduce up to 10 percent. the value of the properties.
Regarding the postponed VAT, he proposed that it be paid directly to the Internal Revenue Service (SII) in installments, at a rate similar to the State’s debt, with a 30-year profile.
“This would allow families to pay that VAT at a rate lower than what the mortgage market currently offers,” said Ugarte; formula that would only be for first homes and values up to 6 thousand UF.
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