Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Sixteenth Congress
Second Regular Session

House Bill No. 50391

Introduced by Honorable Roy M. Loyola

EXPLANATORY NOTE

Nothing gives a person a sense of stability and security than having a
place to call his or her own home. A family home provides an atmosphere of
permanence, and serves as one’s sanctuary from the outside world.
Unfortunately, due to the high cost of acquiring one’s own residence, more
Filipinos are opting to rent instead. According to an initial study conducted by
the Statistical Research and Training Center of the National Economic and
Development Authority (NEDA), there are approximately 1.5 million
households or 7.2% renters out of the total 21.5 million households
nationwide.’ While they can invest in and eventually acquire a property which
they can consider their own home, they instead use their finances to pay for
their monthly rents. Home ownership therefore remains unattainable for them.

At present, more and more developers are offering affordable housing
options through low down payments and easy payment schemes for potential
home buyers. However, despite this, less buyers are lured into buying their
own homes. They are being deterred from doing so by the financing aspect,
more specifically, the interest rates imposed by banking institutions and by
these developers themselves. This is where the government should step in
by providing an incentive to those who would be purchasing their first family
home.

Along this line, this bill aims to aid Filipino families in acquiring their first
family home by providing for a Home Mortgage Interest Relief, an individual
income tax incentive.

This tax incentive makes any interest accruing within a taxable year
from any loan obtained for the purpose of acquiring or constructing a family
home deductible from the gross income of a qualified taxpayer. By removing
interest rates in the equation, potential homeowners will only have to pay the
principal amount of the property, and thus avoid the stress of dealing with

* Retrieved from http://newsinfo,inavirer net/548597/rent-control-act-of-2008-extensded-for-2-more-years
Accessed on 23 January 2014.



ballooning interest payments. Moreover, this relief will provide tax savings for
the individual which he/she can use for other things.

With the passage of this bill, it is hoped that the shortage of decent
housing would be addressed and our countrymen would have the opportunity
to have a place of their own to call home.

In view of the foregoing, early passage of this bill is earnestly sought.

YY M. LOYOLA


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Sixteenth Congress
First Regular Session

House BillNo.__ 091.

Introduced by Honorable Roy M. Loyola

AN ACT
PROVIDING FOR HOME MORTGAGE INTEREST RELIEF FOR THE FIRST
FAMILY HOME, AMENDING FOR THE PURPOSE SECTION 34 OF THE
NATIONAL INTERNAL REVENUE CODE OF THE PHILIPPINES, AS AMENDED.

Be it enacted by the House of Representatives and the Senate of the
Philippines in Congress Assembled:

SECTION 1. Title. ~ This Act shall be known as the "Home Mortgage Interest
Relief Act of 2014".

Sec. 2. Declaration of State Policy. ~ It shall be the policy of the State to
encourage home ownership and to provide financial assistance to Filipino families
desiring to have their first family homes.

Sec. 3. Definition of Terms. ~ For purposes of this Act, the following terms or

phrases shall mean or be understood as follows:

a. Family Home ~ shall refer to the dwelling house constituted jointly by the
husband and wife, or by an unmarried head of the family, including the
land on which it is situated, as defined under Articles 152 and 153 of
Executive Order No. 209 or the Family Code of the Philippines, as
amended,

b. First Family Home ~ shall refer to the first dwelling house, either bought
or constructed, and used as the primary residence of a family or by an
unmarried head of the family

cc. Unmarried Head of the Family - shall refer to any person, regardless of
civil status, who has one or more dependent/s who rely upon him/her for
chief support

d. Dependent ~ shall refer to any, or a combination of two or more of the
following persons

i. father or a mother or both;

ji, One or more brothers or sisters who are unmarried, not
gainfully employed, and less than twenty one (21) years of
age;


ii, One or more legitimate, illegitimate, adopted or foster children
provided that such children are unmarried, not gainfully
employed, and less than twenty one (21) years of age;

iv. One or more siblings or children, regardless of age, who
suffers from a mental or physical defect.

@. Solo Parent ~ shall refer to any person qualified as such pursuant to
Section 3(a) of Republic Act No, 8972 or the “Solo Parents’ Welfare Act
of 2000".

f Qualified Mortgage Loan - shall refer to a housing foan from any
reputable bank operating in the Philippines, obtained for the purpose of
purchasing or constructing a family home, and whose loan amount
fanges from four hundred thousand pesos (P400,000) to two million and
five hundred thousand pesos (P2,500,000).

g. Mortgage interest Relief ~ shall refer to an itemized tax deduction that
allows homeowners to deduct the interest they pay on a qualified
mortgage loan used for the purchase or construction of their first family
home.

h. Qualified Taxpayer ~ shall refer to a taxpayer who is in good standing and

has obtained a housing loan for the purpose of acquiring or constructing
his family home.

Sec. 4, Qualified Residence. — In order to be considered as the “first family

home as provided for under this Act, the following requisites must concur:
a. The residence being claimed as a first family home must meet the
requirements set forth under Articles 152 — 162 of the Family Code or

under Articles 224 ~251 of the Civil Code, as the case may be;

b. This must be the “first” family home of the taxpayer and be proven as
‘such;

c. The value of the subject family home must not be lower than Four
Hundred Thousand Pesos (P400,000) nor more than Two Million Five
Hundred Pesos (P2,500,000); and

d, The claimant, to qualify under this proposal, must submit all the requisite
documents such as, but not limited to, the notarized deed of sale, tax
declaration, bank assessment, loan documents, Income Tax Returns
(ITR) and/or Sworn Statement of Assets, Liabilities and Networth (SALN)
proving the constitution of the structure as his/her family home and
his/her ownership of the same and such other documents as may be
required under the implementing rules and regulations to be promulgated
in relation thereto.

Sec. 5. Exceptional Circumstances. - The qualified taxpayer may likewise
claim the privilege provided for under this Act if his/her situation falls under any of the
following instances:

a. If the qualified taxpayer is a solo parent as defined under Section 3(a) of

Republic Act No. 8972, otherwise known as “Solo Parents’ Welfare Act of
2000";


b. If the original family home was destroyed, either completely or
substantially, due to force majeure or an act of God such as but not limited
to storms, floods, earthquake, volcanic eruption, fire, and other forms of
natural calamities, and the taxpayer constructs or purchases a new
residential unit;

. If the original family home was lost due to a valid expropriation by the
Government.

Sec. 6. Home Mortgage Interest Relief. ~ Section 34 of the National Internal
Revenue Code (NIRC), as amended, is hereby further amended to read as follows:

“SEC. 34. Deductions from Gross Income. - Except for taxpayers
earning compensation income arising from personal services
rendered under an employer-employee relationship where no
deductions shall be allowed under this Section other than under
Subsection (M) hereof, in computing taxable income subject to income
tax under Sections 24(A); 26; 27(A), (B), and (C); and 28(A)(1), there
shall be allowed the following deductions from gross income:

(A) Expenses. ~

XXX,

(M) Premium Payments on Health and/or

Hospitalization Insurance of an Individual Taxpayer. -

XXX,

(N) HOME MORTGAGE INTEREST RELIEF. - ANY

INTEREST TO BE PAID OR ACCRUING WITHIN A

TAXABLE YEAR FROM ANY LOAN OBTAINED FOR

THE PURPOSE OF ACQUIRING OR CONSTRUCTING

A QUALIFIED TAXPAYER'S FIRST FAMILY HOME, AS

MAY BE DEFINED BY EXISTING LAWS AND/OR

RULES AND REGULATIONS TO BE ISSUED FOR THE

PROPER IMPLEMENTATION OF THIS ACT.”

Sec.7. The necessary implementing rules and regulations (IRR) for purposes
of this Act shall be jointly issued by the Department of Finance (DOF), the Housing
and Land Use Regulatory Board (HLURB), and the Bureau of Internal Revenue
(BIR), within sixty (60) days from the effectivity of this Act.

Sec. 8. All laws, decrees, executive orders or any other issuances or parts
thereof which are inconsistent with the provisions of this Act are hereby repealed,
amended or modified accordingly.

Sec. 9, If any provision of this Act is held invalid or unconstitutional, any
other provision not affected shall continue to be in full force and effect.

Sec. 10. This Act shall take effect fifteen (15) days after its complete
publication in the Official Gazette or in at least two (2) newspapers of general
circulation.

Approved,