Buy A New House, The Tax Is Free But Only Until August 2021

Illustration. (Photo: Doc. Ministry of PUPR)

JAKARTA - The government has finally released a further tax incentive policy in the form of a VAT (Value Added Tax) exemption for the property sector.

Minister of Finance (Menkeu) Sri Mulyani said this strategy is expected to raise consumption as well as the production of the housing sector amid the economic downturn during the pandemic.

"This is valid for six months from March 1 to August 31", she said in the Press Statement on the Incentives for Motor Vehicles and Housing which was held with several related ministers Monday, March 1.

Meanwhile, this facility can be provided to consumers by meeting two requirements. First, it must be a type of landed house or flat with a maximum selling value of IDR 2 billion and will be given a VAT exemption of up to 100 percent.

Second, landed houses or flats with a sale value of between IDR 2 billion to IDR 5 billion will be given a 50 percent VAT exemption.

Then, another requirement that must be fulfilled is that each person can only buy one type of property within a period of one year, and cannot be resold within one year. Then, it does not apply to pivot properties and must be a handover of the building from the developer to the owner.

"We provide this incentive to also consider other factors, such as employment and other industrial sectors related to this sector, which are expected to revive", he said.

Another reason mentioned by the Minister of Finance was that the property sector has contributed significantly to sustaining the economy so far. It is recorded that during the last 20 years this sector has contributed up to two digits to the formation of the national economy.

Meanwhile, the realization over the past year, the segmentation of the housing industry, said the Minister of Finance contracted to a minus level.

To note, the government claims the property sector absorbed up to 9.1 million workers in the pre-pandemic period. This figure is strongly suspected to decrease in 2020 in line with the sluggish demand for housing due to COVID-19.