Restrictions on Income Tax Return for Mortgage Loans to be Implemented in Regions

The Armenian government will limit the application of income tax returns for mortgage loans. This decision was made during a government meeting. Presenting the draft amendment to the Tax Code, Minister of Finance Vahe Hakobyan noted that the scope of the income tax return system for servicing mortgage loans will be gradually reduced by year and by region.

“There are two main objectives: to encourage business entities and citizens' decision-making in construction and economic activity in the regions over time. Also, to restrain the further expansion of the scope of application of the income tax return system in the long term,” the minister elaborated.

Thus, starting from January 1, 2027, income tax will not be returned for mortgage loans if the property is located in the adjacent Aragatsotn, Armavir, and Kotayk regions of Yerevan. Additionally, starting from January 1, 2029, income tax will not be returned for mortgage loans granted for properties in other regions.

The restrictions will not apply to border settlements of Armenia.

“For mortgage loans received after January 1, 2025, the total amount of income tax eligible for return for the borrower and, if applicable, the co-borrower, for each quarter cannot exceed 750,000 AMD,” the minister added.

Prime Minister Nikol Pashinyan also noted that since 2018, more than 35,000 families have acquired housing through the income tax return system for mortgage loans. According to the Prime Minister, as of the results of 2022, 35 billion AMD of income tax returns were carried out, 90% of which were related to mortgage loans.

Pashinyan endorsed the project but simultaneously announced that it would be temporarily removed from the agenda until certain details concerning relationships with construction companies are clarified.