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TRANSFER TAX & STAMP DUTY NOW 4% & 3% RESPECTIVELY AS AT AUGUST 1, 2009 Prime Minister, the Most Honourable Bruce Golding announced on December
14, 2008 a number of new measures to stimulate the economy which is now reeling from the global financial meltdown.The new
measures take effect on January 1, 2009. One such measure is the reduction in transfer tax which is applicable when transferring
ownership of real estate. The new mark was 5% coming down from 6% which itself represents a shrinkage by 1.5% pre-May 1,
2008 when the Honourable Audley Shaw, the Minister of Finance reduced the rate from 7.5%. During the budget debate in April
Minister Shaw announced a further reduction in both transfer tax and stamp duty to 4% & 3% respectively to take effect on
January 1, 2010. It was therefore a welcomed surprise when the Minister informed the Nation on July 28, 2009 that the reduction
would be brought forward to August 1st. The rationale given is to provide a stimulus to critically ill real estate market.
Some would argue though that this was done to appease the country after the decision was taken to return to the International
Monetary Fund. Some commentators will say
that no matter how low you reduce tax rates applicable in real estate transfers this will have little, if any, impact on the
market since the fundamentals are lacking. If potential buyers are unable to finance the purchase of a house or land due to
higher interest rates on mortgages or the uncertainties in the job market tax rates become secondary. The restoration of confidence
in the credit sector in countries like the United States, Japan and many in the European Union will be necessary before any
semblance of stability in developing countries like Jamaica can return. Our economy is too heavily dependent on the performance
of others to succesfully negotiate the maze of economic obstacles before us. It is our hope that the market will robustly
bounce back soon after hitting the bottom. 100%
TAX AMNESTY ENDS JULY 31,2008 The Minister of Finance and the Public Service, the Honourable Audley Shaw has approved an extension of the
100% waiver of interest and penalty to July 31, 2008. Persons with taxes outstanding on or before April 11, 2008, now have
an additional month to pay their taxes owed to get the full 100% relief from interest, penalties and other charges. The extension in the 100% waiver is in response to requests from primarily the business community
who appealed to the Minister to allow more time for them to make appropriate arrangements to clear their outstanding liabilities.
Also based on the overwhelming response to the 100% waiver offer, persons operating outside the tax system have also indicated
the need for additional time to prepare their returns and to regularise their operations, as they seek to benefit from the
relief on charges. Taxpayers will therefore have more time to reconcile their records
with the information available in the tax departments without losing the opportunity to benefit from the 100% relief. It should be noted that the period of the amnesty still ends on October 31, 2008. Payments
made by July 31 will now get a 100% waiver instead of the previous 80%. However, the relief of interest and penalties to be
granted in subsequent months remain the same. Waiver on payments made by August 31 remains at fifty percent (50%); by September
30 remains at forty percent (40%); and by October 31 remains at twenty percent (20%). Taxpayers
who have amounts outstanding for Property Tax, General Consumption Tax (GCT), Special Consumption Tax (SCT), Contractors Levy,
Income Tax (PAYE, Corporate, Individual), Education Tax, Transfer Tax, Stamp Duty, and Asset Tax are urged to take advantage
of the extra time and pay their outstanding principal amounts by July 31 to get the 100% relief from all charges being offered
under the Tax Amnesty. REDUCTION IN TRANSFER TAX &
STAMP DUTY As of May 1, 2008 vendors and purchasers of Real Estate
will be benefiting from a reduction in Transfer Tax and Stamp Duty. The new rates will be 6% and 4.5% respectively - coming
down from 7.5% and 5.5%respectively. NHT OFFERS CLUSTER LOANS Beginning April 1, 2008 the NHT will be offering a new product called a cluster loan. Essentially
this new facility allows nine (9) individual applicants or eighteen (18) co applicants to apply to purchase a parcel of land
suitable for subdivision into 9 lots. Applicants can also use the joint Finance program to access this service. The usual documents supplied in processing
a house lot must be provided to the Trust together with a letter from the relevant Parish Council inidcating that the land
may be subdivided. NHT INCREASES LOAN LIMIT
The Prime Minister recently announced,
in a speech to mark the 30th anniversary of the NHT, increases in the loan limits accessible through the NHT. These increases
come into effect at the start of the new financial year, April 1, 2006.
The increases are as follows:
1. Scheme, Open Market, and Building on Own Land benefits
The loan limits for Scheme, Open Market, and Building on
Own Land benefits will increase from $1.5 million to $3million per applicant. This means that two applicants coming together
to purchase a unit can obtain $6 million.
2.Serviced Lot/ House Lot
The loan limits for a Serviced
Lot and House Lot move from $600,000.00 to $1 million and with two applicants, it moves from $800,000.00 to $1.6 million.
3.Home Improvement
The loan limits for home improvement for single applicants move from $600,000.00 to
$1 million and with two applicants, it moves from $1.2 million to $2 million.
* Revision of the eligibility criteria
to apply for an NHT loan which at present entails applicants having to account for and pay up with interest, contributions
due in the last seven years. This has now been reduced to three years.
* Currently contributors are entitled to
one benefit in their life time. Considerations are being given to two new initiatives which will benefit persons who received
loans at least fifteen years ago, namely:
o The Home Enhancement Loan Plan (HELP) which allows for repairs to residential
properties owned by contributors; and
o The Home Ownership by Exception (HOPE) initiative which entitles contributors
who have received a loan, but who are now no longer home owners to access another loan.
* Access to construction
loans after the expiration of seven years, will be changed to accommodate applications at any time.
AMNESTY PERIOD FOR TRANSFER TAX ON ESTATES ENDS SOON!!
In April of 2005 the Minister of Finance announced a new amnesty measure aimed at increasing the compliance rate for the
payment of transfer tax on estates. In doing so the method of calculating the tax was simplified and reduced to a flat rate
of 7.5% for all estates with a value of at least $100,000.00. At the time of the announcement only estates of persons who
died after June 1, 2005 could benefit from the new regime, however the scope was later widened to include all estates. Pre
June 1, 2005 estates can only access this amnesty to the end of December 2005. After that date the taxpayer will be required
to pay the estate tax based on the old rate which could be as high as 15% depending on the value of the estate. The assessed
amount will also attract interest at the rate of 6% per annum until paid.
e&oe
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