SANTO DOMINGO.- The new amount proposed by the Government in the Fiscal Modernization Bill, for the Real Estate Property Tax (IPI), represents a hard blow for the Dominican middle class and for the construction sector, said engineer Teodoro Tejada, former president of the Dominican College of Engineers, Architects and Surveyors (CODIA), this Wednesday.
He explained that since its creation in 2012, "this abusive tax" has been extremely harmful and that the amount set in the proposal will also affect those people with lower incomes who have acquired a home without having the resources, but through, for example, an inheritance.
He said that for this year 2024, the value determined by the General Directorate of Internal Taxes (DGII) was RD$9,860,649.00, and that with the proposed tax modernization law presented by the government of President Luis Abinader, that amount drops radically to 5 million 25 thousand 380 pesos with 75 cents.
Teodoro Tejada. (External source).
“It should be noted that the dollar exchange rate on November 13, 2012, was 39.90. Yesterday, dollars were being bought in national banks at 60.25, which means that a house that previously cost 5 million at a rate of 39.90, is now costing practically 10 or 12 million.”.
Tejada argued that construction prices have increased significantly since the pandemic. “A plot of land that cost 12 million before the pandemic went up to 28 million afterward, which means that construction costs have multiplied.”.
“A property currently worth 15 million pesos had the equivalent of one worth 6.5 million pesos in 2012. So, we are facing one of the most criminal taxes for the construction sector and for the middle class,” he told El Inmobiliario.
He pointed out that someone who owns an apartment worth 10 million pesos will only have 5 million pesos exempt, meaning they will have to pay 1% of the remaining value. “That means 50,000 pesos divided into 6 monthly installments. It means that this poor person has to come up with 25,000 pesos every 6 months, with the added problem that the interest rate on mortgage loans for a 10 million peso apartment has risen exorbitantly,” Tejada emphasized.
He added that in addition to taxes, there's the apartment maintenance fee, which has also increased. "When you pay 6,000 pesos for maintenance, you're already paying 10,000 pesos because it doesn't cover the necessary upkeep of the property.".
The businessman called on President Luis Abinader to "seriously consider lowering that," recommending reducing it to 0.5% and not 1%, as the proposal states.
“You can’t keep killing the middle class. Hey, that’s the most abusive tax there is.”.
Supports the president's purpose
Tejada stated that he supports President Luis Abinader's purpose with the reform, but not regarding the housing tax.
“I have to be consistent. I support President Luis Abinader’s goal. But really, that’s where I don’t support him, because he’s killing the middle class. There are people who take out loans to make a down payment on an apartment and then their wives take out another loan to pay for the property.”.
