Finance Minister Dr Ashni Singh on Tuesday signed and sent for publication in the Official Gazette the Income Tax (Mortgage Interest Relief) Regulations 2013, thereby establishing the regulatory foundation for Mortgage Interest Relief (MIR) to be granted pursuant to the introduction of this measure announced in Budget 2013.
According to a release, the Finance Ministry at the time of presenting the 2013 national budget, Minister Singh announced the introduction of MIR with effect from year of income 2013.
Under the newly-introduced relief, the minister stated that “first time home owners who are holders of mortgage loans of up to Gy$ 30 million granted to them by commercial banks or the building society will be permitted to deduct the interest they pay on such mortgages from their taxable income for the purposes of personal income tax.
In other words, that portion of taxable income used by a first time homeowner to pay interest on a housing loan of up to Gy$ 30 million from a commercial bank or building society will be exempt from personal income tax.”
In announcing the introduction of MIR at the time of Budget 2013, Minister Singh situated the new measure within the context of the outstanding success of the government’s housing programme.
He stated at the time that “this government’s housing programme has been a resounding success and has resulted in tens of thousands of Guyanese individuals and families graduating from being tenants of rented property to being homeowners in their own right.
“Armed with real property as an asset which can in turn be collateralised, the positive consequences for owner participation in the formal financial system, and capacity to borrow to finance asset acquisition or even small business establishment and expansion, have been immeasurable.
“In addition to our programmes to develop housing areas and distribute house lots, other policies have been adopted to promote homeownership. These include the special low income housing windows established at the commercial banks under which interest income earned by the banks is exempt from corporate taxes, allowing the banks to offer subsidised interest rates to borrowers of loans for low income housing development.
“Coupled with the rapid growth in low income homeownership has seen equally rapid growth in demand for middle income housing with the growing numbers of young professionals and other middle income earners in our society today.”
The introduction of MIR is expected to cost government approximately Gy$ 580 million annually, and will benefit tens of thousands of first time homeowners, low and middle income alike.
Having signed the necessary regulations, Minister Singh called on the Guyana Revenue Authority (GRA) and the participating financial institutions to proceed to implement the regulations as soon as possible to ensure that the intended relief is delivered to the beneficiary population.
The minister stated that “this relief is expected to make homeownership even more affordable and attractive, will increase disposable incomes in thousands of households, and will constitute a significant injection of cash into the economy for both saving and consumption, thereby generating and multiplying further business activity.”
The minister’s announcement of MIR at the time of Budget 2013 was widely applauded as a measure that would significantly improve the well-being of current and pending homeowners and that would contribute to further growth in the economy as a result of the impetus it will give to homeownership and construction activity.
