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Are the rates paid for the service of the loans received for the purchase of apartment from the building being  constructed, refunded?

The rates paid for the service of the loans received by the hired individuals in order to purhase apartments from the state or community within the implementation of public housing construction programs directly from the Developer of the residential buildings constructed or being constructed in Armenia, are refunded.

The apartment should either be in a

  • new residential building the construction of which is completed with ownership certificates delivered, or
  • residential building under construction, where the Buyer acquires a right to purchase an apartment

This privilege shall be applicable to mortgage loans issued after January 01, 2018 which are   actually utilized for purchase of apartment or construction of private house.

What features should the Apartment have in order to enjoy the benefits of income tax refund?

It should be a new residential building the construction of which is completed with ownership certificates delivered, or a residential building under construction, where the Buyer acquires a right to purchase an apartment

And what features should have private houses?

The borrower should use the mortgage loan to construct a private house based on legitimate construction permit on a land plot they own, or

The borrower should use the mortgage loan only to purchase a newly constructed private house directly from the Developer (legal entity or individual entrepreneur)

 

What limitations are set for the sum refund?

Amount is refunded to the extent of income tax withheld from salary and other equivalent payments of hired worker during each quarter, with the following restrictions:

  1. Value of purchased/constructed apartment/house should be within AMD 55 million.
  2. Quarterly refund should not exceed AMD 1.5 million.

Based on the notice of the notary on the transaction after signing the contract of purchase real estate from the building a preliminary note on the right of property is made at the Committee
of Real Estate Cadastre of the RA. The preliminary note shall be terminated with the subsequent registration of the property right, in particular the  property right of the Buyer is registered to such property.

 

  • On a legal basis the contract of purchase of immovable property from a building under construction is equivalent to a sale contract, and there is no need to conclude an additional purchase contract after the latter’s conclusion.
  • All prepaid payments made by the Buyer for the purchase of the property under construction are made exclusively to the Developers special account, which is opened in the bank of the Republic of Armenia  treasury or notary’s deposit account, as a sub-account.
  • The funds transfered by the Buyer on a specific account of the Developer may be pledged in full or in part in favor of the Buyer or the Buyers Lender as a mean of securing the Developer’s obligation to return the advance payment in case of termination of the contract of purchase real estate from the building and of the Contractor’s obligation to transfer the immovable property right.
  • After the state registration of the completion of the building, a transfer act is concluded between the developer and the Buyer, which is registered in the State Committee of the State Cadastre of the Republic of Armenia, on the basis of which the Buyer obtains the right of ownership, and the existing funds paid by the Buyer to the special account of the developer are transferred to the developer’s bank account and are disposed by him.
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