HOUSE \F REPRESENTATIVES
RECEIVED

pate:__Q5JUL 2016
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REGISTRATION UNIT
BILLS AND INDEX SERVICE

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

Seventeenth Congress
First Regular Session

1198

House Bill No.

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
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[Accessed on 23 January 2014



Principal amount of the property, and thus avoid the stress of dealing with
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

Seventeenth Congress
First Regular Session

1198

House Bill No,

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.

Se 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

2° Mortgage Interest Relief Act of 2016".
3 SECTION 2. DECLARATION OF POLICY. - It shall be the
4 Policy of the State to encourage home ownership and to Provide
5 __ financial assistance to Filipino families desiring to have their first family
homes.
SECTION. 3. DEFINITION OF TERMS. ~ For purposes of this
Act, the following terms or phrases shall mean or be understood as
follows:
9 a. Family Home - shall refer to the dwelling house constituted jointly
10 by the husband and wife, or by an unmarried head of the family,

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including the land on which it is situated, as defined under Articles 152


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and 153 of Executive — Order No. 209 or the Family
Code of the Philippines, as amended.

». 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.

c. 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

¢. Dependent ~ shall refer to any, or a combination of two or more of
the following persons:
A father or a mother or both;
One or more brothers or sisters who are unmarried, not
gainfully employed, and less than twenty one (21) year
of age;
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;
One or more siblings or children, regardless of age, who
‘suffers from a mental or physical defect.
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©. 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 loan from any
reputable bank operating in the Philippines, obtained for the purpose
of purchasing or constructing a family home, and whose loan amount
ranges from four hundred thousand pesos (P400,000) to two million
and five hundred thousand pesos (P2,500,000)


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9 Mortgage Interest Relief - shall refer to an itemized tax
Geduction that allows homeowners to deduct the interest they pay on
@ qualified mortgage loan used for the purchase or construction of
their first family home.

’. Qualified Taxpayer — shall refer to a taxpayer who is in good
Standing and has obtained a housing loan for the purpose of acquiring
oF constructing his family home.

SECTION 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 - 261 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) rior 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 Retums (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


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Tequired under the implementing rules and regulations to be
promulgated in relation thereto

SECTION 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:

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

SECTION 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


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(A) Expenses. ~
XXX,

(M) Premium Payments on Health and/or
Hospitalization Insurance of an Individual
Taxpayer. -

(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

SECTION 7. The necessary implementing rules and regulations
(IRR) for purposes of this Act shalll 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.

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


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SECTION . 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,

SECTION 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,