Tax Deductions for First-time Homeowners - Trinidad and Tobago Mortgage Finance Company Ltd.

Wed 22nd Jul, 20200

 

How to claim tax deductions in Trinidad and Tobago if you are a first time homeowner

 

Simply put, tax deductions provide extra disposable income, by reducing the amount of tax you pay. There are many expenses that the government allows you to deduct from your declared income, and being a first-time homeowner is one of them.

 

As of January 2015, you can reduce your annual income tax by up to $25,000. You can claim this tax deduction on the mortgage interest you pay for up to 5 years after buying or building your first home (provided the property was acquired on or after January 1, 2011).

 

Reducing your tax liability gives you more money to put towards other financial goals, so this is an opportunity you don’t want to miss.

 

There are two ways you can take advantage of this tax deduction:

 

BEFORE TAXES ARE DEDUCTED

Avoid excessive tax deductions from your salary in the current year

 

If you wish to claim tax deductions for first-time home ownership, you must

 

  1. Seek approval from the Inland Revenue Division by submitting your TD-1 form and with supporting documentation to the Taxpayer Section.

 

Required documents:

  • A pay slip from your employer, showing salary, gross income and taxes withheld.
  • A copy of the Completion Certificate for properties constructed on or after January 1, 2011 OR
  • A copy of the Deed of Conveyance for properties purchased on or after January 1, 2011
  • Proof of ownership of the property e.g. Mortgage/Title Deed
  • Certificate of Assessment
  • An original statement from a financial institution/affidavit confirming first time acquisition and date property was acquired. The property must have been acquired on or after January 1, 2011.

 

  1. Once approved, The Inland Revenue Division will issue a Certificate of Approval for PAYE Tax Deduction form

 

  1. Present the Certificate of Approval to your employer to guide tax deductions for the rest of the year. This will reduce the amount of PAYE that is deducted from your salary every month resulting in an increase in your take-home pay

 

AFTER TAXES ARE DEDUCTED

File a Tax Return in the following year

 

If you do not get your TD-1 form approved in advance, and you can still claim the tax deductions while filing your tax return the following year. Here’s what you should do:

 

  1. Complete the Tax Return form for the relevant year. You must provide supporting documentation along with your Tax Return form. These include:
  • The TD-4 from your employer, showing salary, gross income and taxes withheld in the relevant year
  • A copy of the Completion Certificate for properties constructed on or after January 1, 2011 OR
  • A copy of the Deed of Conveyance for properties purchased on or after January 1, 2011
  • Proof of ownership of the property e.g. Mortgage/Title Deed
  • Certificate of Assessment
  • An original statement from a financial institution/affidavit confirming first-time acquisition and date property was acquired. The property must have been acquired on or after January 1, 2011.

 

  1. The Inland Revenue Division will assess your tax return and determine whether you qualify for a refund of taxes already paid based on the PAYE deducted from your salary in the relevant year.
  2. If you qualify, you will be issued a cheque for the appropriate amount which you can deposit into your savings account.

 

 

Sources:

Ministry of Finance – Reducing Your Income Tax

Inland Revenue Division – Deductions and Required Supporting Documents, Income Tax Return


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