From January 1, 2025, the legislative changes on the return of income tax on the interest paid for the servicing of the mortgage loan will come into force, according to the SRC.
Regarding mortgage loans received after January 1, 2027, if the real estate is located or is being built or will be built in the administrative territories of Aragatsotn, Ararat, Armavir and Kotayk marzes, except for real estate located or being built in border settlements included in the list approved by the Government,
Regarding mortgage loans received after January 1, 2029, if the real estate is located or is being built or will be built in the administrative territories of Shirak, Lori, Tavush, Gegharkunik, Vayots Dzor and Syunik marzes, except for border areas included in the list approved by the Government of real estate located or under construction in residential areas.
The amendment of the law also established that payments for servicing a mortgage loan received from an RA resident financial organization after January 1, 2025 and aimed at the actual purchase of an apartment from the developer, the state or the community, or the purchase or construction of an individual residential house from the developer who is an organization or individual entrepreneur in the amount of interest amounts to the borrower of the mortgage loan, also to the co-borrowers, if available, to be returned the total amount of income tax cannot exceed 750 thousand drams for each quarter.
The committee also reminds that if the real estate is located, is being built or will be built in the administrative area of Yerevan, then the income tax will not be refunded for the mortgage loans received after January 1, 2025. The specified restriction does not apply to apartments or individual residential houses in multi-apartment residential buildings built (under construction) on the basis of construction permits obtained by decisions adopted before January 1, 2022,” the SRC statement says.
How will the changes in mortgage tax deductions affect real estate market trends in different regions?
Interview Between Time.news Editor and Mortgage Expert
Time.news Editor (T.N.E): Welcome to our segment on financial policy changes. Today, I’m excited to have with us Dr. Elena Grigoriev, a renowned expert in mortgage financing and tax legislation. Thanks for joining us, Dr. Grigoriev!
Dr. Elena Grigoriev (E.G): Thank you for having me! It’s a pleasure to discuss these important topics.
T.N.E: Let’s jump right in. There are significant upcoming changes regarding income tax on mortgage loan interests. What are the key takeaways for homeowners and potential buyers from this upcoming legislation set to take effect on January 1, 2025?
E.G: Absolutely! Starting in 2025, homeowners will have the opportunity to receive tax deductions on the interest paid on mortgage loans. This is a significant shift that can ease the financial burden for many families. However, it’s crucial for borrowers to understand that this applies to loans initiated before January 1, 2027, specifically for properties outside of certain administrative territories.
T.N.E: That’s an important distinction. Now, can you elaborate on the implications for those who are considering purchasing property or developing real estate in the specified regions like Aragatsotn, Ararat, Armavir, and Kotayk?
E.G: Certainly! For properties located in those regions and for loans taken out after 2027, individuals won’t benefit from the income tax deduction on mortgage interest. This could influence the market dynamics and potentially decrease demand in those areas. Buyers may need to weigh the benefits of tax deductions against the overall investment in these regions.
T.N.E: Interesting! So, it seems that location will play a crucial role in decision-making for potential homeowners. Do you anticipate any shifts in real estate activity as a result of this policy?
E.G: Yes, I do. If buyers are more aware of the tax incentives, we might see a flight toward regions that do fall under the deduction umbrella. Areas that could potentially miss out on new development, like those border settlements, might experience slower growth. Conversely, regions that still qualify for the deduction could see a buyer’s surge.
T.N.E: That makes a lot of sense. Apart from the direct financial implications for buyers and homeowners, what broader effects could these changes have on the economy and real estate market as a whole?
E.G: Well, by incentivizing homeownership through tax reductions, we could stimulate economic growth. Homeownership can lead to increased spending in related sectors such as home improvement and local services. However, if the disparity in benefits leads to a concentration of investments in certain areas, it may affect property values in others, potentially widening economic disparities between regions.
T.N.E: Those are critical points for policymakers to consider. Any advice on how potential buyers or homeowners should navigate this upcoming landscape?
E.G: Certainly! It’s essential for buyers to stay informed about the legislative changes and how they affect their financial planning. Consulting with a financial adviser or mortgage specialist can provide personalized strategies to maximize potential tax benefits. Being proactive in understanding the market and regional dynamics will empower buyers to make informed decisions.
T.N.E: Excellent advice, Dr. Grigoriev. Thanks for your insights today! This upcoming legislation seems poised to have a considerable impact on both the real estate market and individual homeowners.
E.G: Thank you for having me! I look forward to seeing how these changes will shape our housing landscape in the coming years.
T.N.E: And so do we! Thank you to our viewers for tuning in. Stay informed as these exciting developments unfold!