In Which Cases Is Income Tax Refund Possible? Babken Tunyan Clarifies

The National Assembly discussed a draft law presented by the deputies of the "Civil Contract" faction, which proposes to allow the signing of a purchase rights agreement when acquiring an apartment from a developer before the completion of construction, enabling access to the income tax refund system.

Co-author of the project, Babken Tunyan, reminded that there is a system in Armenia that allows individuals to receive refunds on income tax paid based on the interest of mortgage loans when purchasing an apartment directly from the primary market, that is, from the developer. He stated, "The logic was as follows: it was not mandatory for people to wait for the completion of the building's construction to enter into a purchase rights agreement and formalize a mortgage loan. Subsequently, when the apartment eventually changed ownership through a final sale after one or two years, the re-registration would take place. This purchase rights mechanism allowed developers to enter into certain financial relationships and solve the problem of circulating funds before the building was completed, but a question arose because the law specified that the purchase rights only applied to cases of acquiring apartments in multi-apartment buildings, thus leaving residential houses out of this regulation, preventing developers from benefiting from this option," Tunyan noted.

The ruling party deputies added the concept of residential houses to the process of acquiring apartments in multi-apartment buildings, and the adoption of the law will allow individuals to sign a purchase rights agreement when constructing a residential house or acquiring one from developers, enabling the initiation of the entire process beforehand.

Tunyan explained that the income tax refund is still operational for purchasing apartments in both multi-apartment buildings and residential houses. However, in the case of multi-apartment buildings, the entire process could begin before the construction was completed, whereas for residential houses, developers or buyers had to wait until the construction reached completion and the final act was available before starting the process.

"In other words, in essence, we are solving a timing issue for developers," he said.

Deputy Hayk Tsirunyan inquired whether a citizen who wants to build a residential house for themselves but is not a builder could benefit from the same law. Tunyan responded that the proposed regulation would not apply in that case, as it pertains specifically to the rights of purchase; it grants the citizen the right to purchase a house from another party.