Measure seeks to exempt real estate services from sales tax
By John McPhaul
In order to promote greater economic activity, New Progressive Party (NPP) Rep. Yashira Lebrón Rodríguez announced Sunday the filing of House Bill 336, which seeks to exempt from the sales and use tax (IVU by its Spanish acronym) all services related to residential, commercial, agricultural and industrial real estate.
The District 8 representative wrote in the Statement of Purpose for the measure that “the imposition of the Sales and Use Tax on real estate services is having a detrimental effect on the industry and even more importantly on the consumer, reducing real estate transactions and therefore reducing the income from the taxes collected.”
The legislation amends Sections 4010.01 and 4110.01 of Act 1-2011, known as the Puerto Rico Internal Revenue Code of 2011, to establish the elimination of the IVU throughout the transactional process.
“In a real estate transaction, a group of professionals participate throughout the process, until finally the property is handed over to the new owner,” Lebrón Rodríguez said. “Such individuals include nearly all those listed as designated professional services, including real estate brokers. Therefore, the price per final unit includes the cost of all these services.”
During the past decade, the sale prices of residential properties in Puerto Rico faced a decrease of 23 percent from 2006 to 2019, according to a report published by the Federal Housing Finance Agency.
“The Puerto Rico Real Estate Industry has always been one of the most important sectors of our economy. Unfortunately, it has also been one of the most impacted by the recession and natural events,” the NPP legislator said. “We have all witnessed the significant reduction in property values year after year, the decline in construction of residences and buildings, new projects that cannot be sold, difficult access to credit, the increase in delinquencies, as well as the tens of thousands of foreclosures. We have to look for clear and viable alternatives to reverse this.”