As of November 1, the new law that provides a tax benefit for the purchase of new homes came into effect, This initiative was promoted by the Ministry of Finance, in conjunction with the Ministry of Housing.

Specifically, the benefit applies exceptionally to the acquisition of new new housing housing (whether houses or apartments), and consists of a refundable tax credit, i.e., the person's income tax is reduced or a refund of up to 16 UTM ($1,000) is refundable tax credit, i.e., the individual's income tax is reduced or a refund of up to 16 UTM (approximately $1,000,000) is given. The benefit will be granted for a period of 5 years, so the total amount of tax rebate or subsidy per taxpayer will amount to $5,000,000.

Any person will be able to access the subsidy, as long as the following requirements are met:

1. That the acquired housing is already built and with final reception at the date of entry into force of the law, or that at the date of entry into force of the law they do not have final reception, provided that there is a promise of sale contract for them after October 16, 2023.
2. The purchase and sale must have been carried out after the entry into force of the law and the property acquired must be registered in the person's name at the Real Estate Registry before October 1, 2024.

For example, if we consider the purchase of a new home with a value of UF 3,250 in the Metropolitan Region, which is equivalent to an apartment of about 49 m2 according to GFK data as of 3Q 2023, then the subsidy obtained would cover the payment of 1.3 dividends per year for a period of 5 years, approximately 11% of the total amount to be paid, then the subsidy obtained would cover the payment of 1.3 dividends per year for a period of 5 years, approximately 11% of the total amount to be paid.. All this considering a 25-year mortgage loan for 75% of the value of the property, with a monthly dividend of $765,487 and a CAE of 6.19%, considering the averages shown in the table below.considering the averages shown by the CMF simulator.

Although it is difficult to estimate exactly what the real impact of this measure will be, it seems to be heading in the right direction by making home purchases more accessible to the middle class and the population in general. In addition, it would contribute to reduce the current excess stock of built housing, which is close to historic highs.

Sebastian Mahave

Real Estate Analyst Fynsa AGF