Realtor urges government to lower real estate taxes
Property sales are up by double-digits, with taxes nearing $9 billion during the last fiscal year, but that hardly reflects the industry's potential, according to realtor Deborah Cumming.
She wants the Government to implement its manifesto promise of lowering real estate taxes in order to drive down transaction costs to potential homeowners. This reduction in turn would spur more developments and likely increase the pool of taxes to Government.
"I hope this Government takes this transfer and stamp duty more seriously," she told Wednesday Business in a telephone interview recently. "Government needs to do its part and reduce the fees as it would encourage more constant sale of properties, instead of people holding them. It would also boost building developments and create more jobs."
The cost of sale of property usually totals 14.5 per cent of the value which comprises realtor and legal fees along with stamp duty at four per cent and transfer fees at five per cent. Transfer and stamp duty fees to Government totalled $8.73 billion for fiscal year ending March 2015 or 25 per cent higher than the previous fiscal year, according to data from Tax Administration Jamaica.
LOWER MORTGAGE RATES
Cumming, who heads Century 21 Heave Ho Properties, revealed that her company's sales, are up 15 per cent for 2016 over 2015. The rise is due to the National Debt Exchange bond payout and lower mortgage rates. Government, however, needs to do its part to encourage the sector, she stressed.
"Developers are bawling because the cost of sale is ridiculous," she said.
In January, John Mahfood, the chief executive at Jamaican Teas which operates a real estate arm, blasted as "anachronistic" laws and taxes surrounding the real estate sector which results in a homeowner paying 30 per cent more for units than necessary. It includes 16.5 per cent for general consumption tax and nine per cent on stamp and transfer fees, he said in his presentation at the Jamaica Stock Exchange's annual conference.
Cumming added that another benefit of reducing the rates is that it would discourage persons from holding properties in offshore companies.
"The prime minister, and not just him, but when you speak to everybody, that is what they do. Whenever you have any substantial real estate you put it in an offshore company," she said, referencing Prime Minister Andrew Holness, who became a director in Admat, a St Lucia-based company that purchased the land on which his mansion is being built.
Cumming added that Government could also scrap the fees and introduce a capital gains tax, which she believes would result in a faster sale of homes.
The Jamaica Labour Party manifesto indicates that the Government will again reduce transfer taxes, stamp duties and estate taxes.
"As has been demonstrated all over the world, construction is one of the fastest routes to stimulating the economy. We will increase construction as a result of lower stamp duty and transfer tax, as well as housing market reform. This will generate thousands more jobs," stated the manifesto.