Real deal for buyers, sellers - Cut in stamp duty, transfer tax to boost real estate sector
Published: Sunday | April 26, 2009
Gareth Manning, Gleaner writer
THE REDUCTION in stamp duty and transfer tax aimed at stimulating a revival of the real estate and construction sectors will mean savings for both buyers and sellers in the market, says realtor Valerie Levy.
Minister of Finance and the Public Service Audley Shaw announced in Parliament on Thursday that stamp duty will be reduced from 4.5 per cent to three per cent, and transfer tax from five per cent to four per cent, effective January 1, 2010.
The move, which will cost the Government $644 million in revenue, is good news for the real estate market.
"When people are considering buying a home they are thinking of the deposit, they are thinking that they have to get a mortgage and the cost to get the mortgage, but often times they don't go as far as thinking about the cost of transferring the property from one person to the other," explains Levy in an interview with The Sunday Gleaner on the weekend.
"The buyers cost now is going to be 1.5 per cent because the stamp duty is being reduced to three per cent, which means that it is split between the vendor and the purchaser, so that's a big saving when you think that the average home is at a price beginning at $3 million," says Levy.
"Because it's the net out figure that really matters when you are in a transaction to a seller. So every dollar that that seller can keep is definitely a tremendous asset," she adds.
Jamaicans living abroad seeking to buy properties here will also find it much more manageable, according to the realtor.
"The percentage that government takes now is just horrendous, it's higher than most other countries apart from Bermuda and a couple of other smaller places," she says.
Real estate savings
How much will I save if I am buying a $10 million property?
Pay now: 2.5 per cent for stamp duty ($250,000).
Pay in Jan 2010: 1.5 per cent ($150,000) since buyers only pay half of the stamp duty.
Now: Pays transfer tax of 5.5 per cent.
Jan 2010: Pays transfer tax of 4 per cent.
Documents are stamped to make them legal and binding. Unstamped or insufficiently stamped documents are not admissible in a court of law, except in criminal cases. Transfer tax is assessed and paid by persons transferring real properties, including land and/or transferring property on death.
Among documents requiring stamping are - bills of sale, deed poll, discharge of mortgage, hire purchase agreements, insurance policies, applications to register land, land leases, loan agreements, mortgages, sale agreements and instruments for the transfer of property.