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Monday, February 24, 2025

Terra CEO calls for stamp-duty adjustment

by

Peter Christopher
165 days ago
20240911

As the chap­ter clos­es on the 2024 fis­cal year, a call is be­ing made to re­vise the stamp-du­ty tax tiers, among oth­er con­sid­er­a­tions to help ad­dress re­al es­tate and con­struc­tion in­dus­try costs.

Ac­cord­ing to the CEO of re­al es­tate agency Ter­ra Caribbean, Jean Paul de Meil­lac, ad­dress­ing the cur­rent stamp du­ty struc­ture could aid in pro­vid­ing low-cost hous­ing.

Stamp du­ty is a tax ap­plied to cer­tain trans­ac­tions that re­quire le­gal doc­u­ments such as deeds of con­veyance, deeds of gift, deeds of mort­gage, re­lease of mort­gage loan, re­lease of life in­sur­ance poli­cies, trans­fer of shares, deeds of lease, deed polls, bonds, and any oth­er deeds that re­quire “stamp­ing” which means users must pay du­ty.

Stamp du­ty tax is paid to the In­land Rev­enue Di­vi­sion when buy­ing re­al es­tate or a home, seek­ing a mort­gage, or con­duct­ing oth­er fi­nan­cial trans­ac­tions.

“It’s a tier sys­tem where the stamp-du­ty rates in­crease and get up to 7.5 per cent on res­i­den­tial prop­er­ty, pret­ty ear­ly in the price point. You know we’ve had in­fla­tion. Prop­er­ty prices have in­creased sig­nif­i­cant­ly with this method­ol­o­gy. But it hasn’t been ad­just­ed to re­flect where the prices are to­day,” said de Meil­lac in a phone in­ter­view with the Busi­ness Guardian.

“The stamp du­ty now is when you buy a prop­er­ty and you go to reg­is­ter the deed, you pay a one-time fee to the Gov­ern­ment based on the val­ue of the prop­er­ty, and the scale is based on an­ti­quat­ed fees, an­ti­quat­ed prices. The prices have in­creased now, so you al­most al­ways end up pay­ing 7.5 per cent be­cause the kind of ease up the low­er tier tax­es are much be­low what is avail­able,” said the Ter­ra Caribbean CEO.

The cur­rent tier rates for Stamp Du­ty for res­i­den­tial prop­er­ties with val­ues that ex­ceed $850,000:

• For every dol­lar of the first $400,000 in ex­cess of $850,000 – 3%

• For every dol­lar of the next $500,000 – 5%

• For every dol­lar there­after – 7.5%

De Meil­lac ex­plained, “Up to $850,000 you pay no stamp du­ty. But be­tween $850,000 and $1.2 mil­lion you can’t get a house or an apart­ment and be­tween $850,000 and $1.25 mil­lion, you pay a 3 per cent stamp du­ty. So to me, that band should start a lit­tle high­er, and maybe that band should be a lit­tle wider. Then from $1.25 mil­lion it goes to $1.75 mil­lion at 5 per cent and then very quick­ly it gets to 7.5 per cent (from $1.75m up­ward).”

The Ter­ra Caribbean CEO not­ed that this would place T&T above the stamp du­ty rates in oth­er Cari­com states such as Guyana, Ja­maica, and Bar­ba­dos, where stamp du­ty rates hov­er be­tween 2 per cent and 3 per cent.

To fur­ther sup­port the call to ad­just the stamp-du­ty tiers, he point­ed to the ex­emp­tion cur­rent­ly ap­plied to first-time home own­ers.

He said, “The gov­ern­ment, right now, they of­fer no stamp du­ty, up to $2 mil­lion for first-time home­own­ers, which I com­mend great­ly. I think that’s fan­tas­tic, and that has helped the first-time buy­er to af­ford a home.”

He said that cost is not lost to the econ­o­my how­ev­er as it of­ten would lead to those buy­ers plac­ing more in­to ren­o­va­tion of their prop­er­ty.

“The stamp du­ty they would have paid goes back in­to the loan or goes back in­to any im­prove­ments to the prop­er­ty. So while I’m say­ing, hey, re­duce the tax you’re col­lect­ing, what hap­pens is the mon­ey goes back in­to the con­struc­tion in­dus­try, which is one of the main dri­vers in the econ­o­my. It en­ables the more vul­ner­a­ble to af­ford hous­ing, and it dri­ves that tax back in­to the con­struc­tion in­dus­try, which is one of the main dri­vers in the econ­o­my,” said de Meil­lac. “I know the gov­ern­ment would not like to hear when we say cut tax­es, but I do be­lieve it’s in their in­ter­est too, be­cause it will go back in­to the econ­o­my. Which we all want, a bet­ter, stronger econ­o­my.”

In 2021, the gov­ern­ment cre­at­ed an on­line link on De­vel­opTT for stamp du­ty ex­emp­tion ap­pli­ca­tions. The ex­emp­tion from stamp-du­ty can be sought when buy­ing, sell­ing or dis­pos­ing of res­i­den­tial prop­er­ties val­ued at TT $1.5 mil­lion or less.

While de Meil­lac did see this as an im­prove­ment in the process, he al­so called for the gov­ern­ment to im­prove the ap­pli­ca­tion process across the board for var­i­ous stages of the re­al es­tate de­vel­op­ment process

“It’s a step in the right di­rec­tion, but it is se­quen­tial in some in­stances. You have to get one min­istry be­fore you get the next min­istry then to get the next min­istry, it can be cum­ber­some, and it can take time, which ef­fec­tive­ly is mon­ey, right? And that cost to a de­vel­op­er, is passed on to the buy­er, so what­ev­er the gov­ern­ment can do to ease the process for a de­vel­op­er to pro­duce a more af­ford­able prod­uct is ben­e­fit­ing the con­sumer and the more vul­ner­a­ble in so­ci­ety to af­ford hous­es, which is re­al­ly what we all want to get to,” said de Meil­lac.

Ahead of the bud­get, the Ter­ra Caribbean CEO al­so called for an ex­ten­sion of the tax ex­emp­tion on the sale of prop­er­ty con­struct­ed for $1.5 mil­lion or less, which is cur­rent­ly set to ex­pire by De­cem­ber 2025.

He said this would give de­vel­op­ers greater con­fi­dence in ap­proach­ing new projects. He stressed while it ap­peared that these ad­just­ments would on­ly favour de­vel­op­ers, he said in­vari­ably these re­duced costs are passed on to buy­ers. He said cur­rent­ly most de­vel­op­ers were strug­gling to make cost-friend­ly homes due to in­creased costs of ma­te­ri­als and have large­ly opt­ed to try to re­pur­pose old­er build­ings.

“Just up­dat­ing ex­ist­ing res­i­den­tial prop­er­ties where the steel and the con­crete are there al­ready, they’re able to pro­duce a prod­uct that’s more af­ford­able. Again, that just kind of points back to the cost of con­struc­tion be­ing one of the main in­hibitors. Con­struc­tion is one of the main dri­vers of our econ­o­my. So there has to be a way to make it hap­pen again. Most de­vel­op­ers are kind of sit­ting on their hands, and be­cause the num­bers don’t make sense, when they work out the cost of build­ing from scratch,” said de Meil­lac.

The Ter­ra Caribbean CEO al­so felt an ad­just­ment in the TT Mort­gage Bank (TTMB) com­bined in­come ceil­ing could open the doors for low­er-in­come buy­ers.

The cur­rent joint in­come ceil­ing for a 5 per cent mort­gage at TTMB for joint salaries be­tween $14,000 and $30,000.


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