Buy A VAT-Free House, Unfortunately Only For Those That Have Been Finished

Illustration. (Photo: Doc. Antara)

JAKARTA - Indonesia Property Watch CEO Ali Tranghanda criticized the government's attitude of imposing VAT (PPN) elimination policies without including indent occupancy or those who have not completed the work period.

According to him, the construction period of certain types of houses requires a construction period that is longer than the period of the VAT-free application.

"To build a house in a certain segment, it may take under 6 months, but if a house is priced above IDR 1 billion, it usually takes more than 6 months and the construction cannot be rushed", he said in a written statement Monday, March 1.

Ali also explained that if there is a housing development that forces itself to participate in the program, but in terms of financial capacity, it is not sufficient, it will become a new problem for the property industry in the country.

"This also has the potential to disrupt cash flow and be burdensome for developers", he said.

Another point highlighted by the housing expert is that the government seems to provide more space for the middle class, considering that the tax relief incentive is already in the segmentation of subsidized housing sales.

"Minister of Finance Sri Mulyani Indrawati stated that the rules for ready-to-live houses are intended to decrease housing stock or increase demand, thus spurring new houses back. It is also important to pay attention not to appear as if the government only sided with the middle class, where the elimination of VAT also applies to FLPP subsidized houses (housing financing liquidity facilities)", she said.

Even though he seems to be contradicting the government's attitude, Ali is actually very supportive of the government's initiative to encourage the revival of the property sector which is being hit by the impact of the pandemic.

"This is an extraordinary step taken by the government to move the economy, especially in the property sector. I hope that the policies released will have a major impact on increasing market absorption so that they can make a positive contribution to the national economy", he added.

As previously reported, Sri Mulyani and several related ministers officially issued a property VAT exemption policy for purchases from March 1 to August 31.

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.

"Consumers should see this as a momentum to buy property because maybe there will no longer be a VAT exemption policy like this", Ali concluded.