The land ministry has proposed a tax break for prospective homeowners be raised to boost home purchases once the sales tax hike takes effect.
The proposal Tuesday to increase the tax break to up to ¥5 million from the current ¥2 million, made at a meeting of the government’s Tax Commission, is designed to ease the burden on home buyers with one of the largest-ever tax breaks on record.
The Land, Infrastructure, Transport and Tourism Ministry hopes to finalize the details by year’s end and to put the new tax break in place in 2014. It has also suggested a five-year extension from 2014, and proposed raising the maximum loan amount at which the tax break is eligible to ¥50 million to return it to the initial level.
In principle, this would allow home buyers income and resident tax deductions of up to ¥5 million over 10 years.
The 5 percent consumption tax is set to be raised to 8 percent in April 2014 and to 10 percent in October 2015. In light of surges and subsequent declines in housing demand before and after past hikes in the levy, the land ministry hopes to boost housing demand by easing the burden on buyers.
The current tax break was introduced in 2009 amid the global financial crisis. Initially, home buyers were assisted by a tax deduction of up to ¥5 million, but the figure was gradually reduced and the current tax break is set to expire next year.