Real estate buyers and developers could avoid significant losses, benefiting from the opportunity of a reduced VAT rate of 9%, through a well-documented action, under the conditions in which the draft law on fiscal measures provides for a transitional period under derogation that allows the application of the reduced rate for new homes up to 120 sq m, say PwC Romania consultants.
"The draft law provides for a transitional period under a derogation regime that allows the application of the reduced VAT rate of 9% for new homes with an area of ??up to 120 sq m and a ceiling of 600,000 RON as follows: there are concluded contracts and a minimum 20% down payment is paid by July 31, 2025; the property can be inhabited as such until July 31, 2026; the buyer has not purchased a home with reduced VAT after January 1, 2023. Therefore, both buyers and developers can initiate negotiations to conclude pre-contracts with reduced VAT that ensure the maintenance of the reduced VAT rate of 9%. This approach must be approached carefully, taking into account the legislative limitations proposed by the Government and requiring an individual analysis for each situation," said Adina Vizoli, partner at PwC Romania, and Emilia Necula, senior manager at the company.
They show, in the article published on Thursday, that, following the amendments included in the fiscal package for which the Government assumed responsibility in Parliament on July 7, the reduced VAT rate is practically eliminated, and will benefit only from the deliveries of real estate intended to be used as nursing homes and pensioners' homes, as well as children's homes, recovery and rehabilitation centers for disabled minors. Thus, for all other transactions in the real estate sector, the standard VAT rate of 21% will be applied, which in practice represents a 133% VAT increase for individual buyers, the consultants emphasize.
"The VAT increase generates a significant impact on the price of homes purchased through the New Home program supported by the Government. Since its launch in 2009, until the end of December 2024, FNGCIMM has granted a number of 334,048 guarantees, totaling 31.6 billion RON, which supported loans worth over 64 billion lei. This tax increase directly influences the final price borne by individuals, especially young beneficiaries of the program, given that the financing ceiling remains unchanged, and the VAT increase reduces the eligible value of affordable homes through this program. According to current rules, for new homes up to 70,000 euros, the advance is only 5%, and for those between 70,000 and 140,000 euros, the advance is 15%. But the increased VAT will significantly reduce the number of homes that can still be purchased within these limits," the cited article also states.
Currently, the delivery of new homes with an area of up to 120 sq m and a value of maximum 600,000 RON (excluding VAT) made by individuals benefits from the reduced VAT rate of 9%, if the conditions and formalities provided for in the Fiscal Code are met. This fiscal facility has been essential for supporting access to housing, PwC shows.
Comentează