Stamp Duty, Transfer Tax Reductions Brought Forward

The Government has brought forward the implementation date for reducing stamp duty and transfer tax to Saturday (August 1), in an effort to stimulate the flagging real estate market.
Minister of Finance and the Public Service, Hon. Audley Shaw, told the House of Representatives Tuesday (July 28), that the move is in response to the drastic reduction in real estate transactions reported by the Tax Administration Department, which has resulted in further revenue loss and a lag in the sector.
In his budget presentation in April, Mr. Shaw announced that stamp duty would be reduced from 4.5% to 3% and transfer tax from 5% to 4%, effective January 1, 2010.
He said that the move would cost the Government $644 million in revenue, but was expected to stimulate a recovery in property sales and construction investments. However, since the announcement the real estate sector has been lobbying the Government to bring the implementation forward to trigger an earlier recovery.
Speaking in the House of Representatives Tuesday (July 28), Mr. Shaw pointed out that with the new proposed implementation date, stamp duty and transfer tax would have been reduced by almost half, since September, 2007.
“In 2007, a vendor paid 7.5 per cent in transfer tax and 2.75 per cent in stamp duty, for a total cost to the vendor of 10.25 per cent. With these adjustments, at August 1, the vendor will now pay 4 per cent in transfer tax and 1.5 per cent in stamp duty, for a total reduced cost of 5.5 per cent, down from 10.25 per cent,” the Minister explained.
He added that, in 2007 buyers paid 2.75 per cent, which was half of the 5.5 per cent stamp duty but, as of August 1, they will pay 1.5 per cent stamp duty.
“These proposed rates will bring Jamaica’s stamp duty and transfer tax rates more in line with international standards,” Mr. Shaw said.
“We see examples in Argentina, their stamp duties range from 0.5 per cent to 2.5 per cent and transfer tax is 1.5 per cent. Barbados has a stamp duty of one per cent, no transfer tax, Belize has a stamp duty of 5 per cent and no transfer tax,” he noted.
Mr. Shaw said that the initiative is supported by the Government’s efforts, through the Office of the Prime Minister (OPM), to accelerate the application and approval process in the housing and construction industry.
He urged the Parish Councils to aid in ensuring the expedition of the approval process, in order to revitalise activity in the construction sector.
Mr. Shaw implored real estate buyers and vendors to take advantage of these significantly reduced real estate transaction costs, in order to stimulate the sector and create jobs.