Original Article: 【顧客から相談される前に抑えておきたい】令和6年度税制改正のポイント
As the tax filing season approaches, the number of consultations about “taxes” will increase dramatically. In particular, there will be a lot of consultation about mortgage tax breaks.
The general public may not be aware of the fact that the first time a customer must apply for a mortgage tax credit, or officially speaking, “Special Credit for Housing Loans, etc.,” but the deadline for this is not the time of filing the tax return. However, this is not the deadline for filing a tax return. The application deadline for those who meet the eligibility requirements (e.g., move-in date) is from January 1 to the end of December of the year following the year of acquisition of the property (mortgage loan).
After the second year, if you submit the “Certificate of Special Deduction for Housing Loan (for Specified Extension, Renovation, etc.)” sent by the local tax office when your employer makes a year-end adjustment, it will be processed together with your application.
In this case, the deadline is March 15, and many people seem to confuse this with the initial application.
Although the use of the Internet for filing tax returns has become more common than in the past, the crowds at tax offices and city halls during the tax filing season are still greater than you may imagine. It is a good idea to advise them on when to file their tax returns, as they may have to wait in line for several hours.
To begin with, the application for the mortgage tax reduction is a refundable tax return, so the process ends with the submission of the documents. If any attached documents are missing or incomplete, the tax office will contact you. Therefore, there is no need to bring the documents to the tax office.
Even so, the application requirements, building performance, deduction rates, and duration are subject to annual changes.
The tax office will not point out what has been under-filed and refund the correct refund. Also, the tax office will not contact you because you forgot to apply for a refund, therefore you will not be able to receive a refund after a certain deadline.
The reason is, as a matter of principle, there is an underlying belief that it is worse to have a right and not exercise it (although there may be a practical reason that the tax office is too busy to respond to every inquiry and all situations).
That is where we real estate agents come in for consultation. At that time, it is not a faux pas to respond to such consultations, “We cannot provide consultation because it would be a violation of the Certified Public Tax Accountant Law.” This response can take as a cold or offsetting.
Article 2, paragraph 3 of the Certified Public Tax Accountants Law prohibits anyone other than certified public tax accountants from providing tax consultations that are subject to the Act on General Rules for National Taxes, etc., regardless of whether or not they are paid.
This includes tax returns, applications, claims, appeals, etc., and is understood to include consultation regarding mortgage tax breaks. In general, however, it is not illegal for a real estate agent to present materials such as booklets for explanation.
Although it may depend on the judgment of each individual whether to respond to the consultation, at least an accurate understanding of the contents is required of real estate professionals.
Therefore, in this blog, we would like to explain in detail the key points of the 2024 tax reform.
Borrowing limits are at the previous year’s level, but will be significantly lower next year.
First, here are some important points regarding the 2024 tax reform.
For new homes for which building permits are obtained after January 2024, mortgage tax breaks will no longer be available if the home does not meet energy conservation standards.
It does not affect houses for which a confirmation application was submitted before then, but we, who introduce properties, must make sure to keep it under control. If we mediate a non-conforming housing and do not explain beforehand that “this property is exempt from the mortgage deduction,” it may lead to trouble at a later date.
As you know, compliance with energy conservation standards will in principle be mandatory for housing for which building permits will be applied for in the next fiscal year (April 2025 or later). As a first step, it has been decided that compliance with energy conservation standards will be a requirement for applying for mortgage tax reductions in 2024 and later.
On that basis, the borrowing limit is 50 million yen for certified housing, 45 million yen for ZEH level energy-saving housing, and 40 million yen for energy-saving standard-compliant housing.
In addition, 20 million yen is the upper limit for general housing which has received building certification by the end of 2023.
The deduction period is 13 years if the residence was occupied between 2023 and 2025 (10 years for new houses built in 2024 and 2025 for ordinary houses).
The deduction rate is a flat rate of 0.7% of the year-end loan balance for the entire period.
In principle, the deduction is made by way of an income tax refund, but what happens to the amount not fully deducted if the income tax is less than the calculated mortgage deduction amount?
In such a case, up to the lower of 5% of income tax or taxable income (up to 97,500 yen) will be refunded from the inhabitant’s tax as well.
It should be noted, however, that in order to receive the maximum credit, the balance of the loan (50 million yen for a certified long-term excellent housing), divided by 0.7%, must be maintained for 13 years, and the amount of income tax and inhabitant tax must be paid in excess of the amount of the credit.
This means that you cannot receive a refund for more than the amount of taxes you have paid or owe.
Difference in Housing Classification
You will want to learn exactly what the different housing classifications are and what the requirements are.
Certified housing (excellent long-term quality and low-carbon)
Housing that meets the provisions of the Act on Promoting the Spread of Excellent Long-term Housing and has been certified as such (Certified Excellent Long-term Housing).
Housing that meets the provisions of the Act on Promotion of Low Carbon Emission in Urban Areas and has been certified as such (certified low-carbon housing).
Specified Energy Consumption Performance Improvement Housing
A house, other than a certified house, that has been certified as a house that significantly contributes to rationalization of energy use (heat insulation performance class 5 or higher and primary energy consumption class 6 or higher).
Usually described as ZEH level energy-saving housing.
Housing with Improved Energy Consumption Performance
A house that has been certified as a house that significantly contributes to rationalization of energy use (heat insulation performance grade 4 or higher and primary energy consumption grade 4 or higher), other than a certified house.
A house other than a certified house or a ZEH level energy-saving house that has been certified by an architect or a registered housing performance evaluation agency as meeting the relevant standard performance.
Usually described as energy conservation standard-compliant housing.
Categorized as general housing which does not have the performance listed above.
If the house meets specific performance standards, a certificate must be submitted when applying for the mortgage deduction.
The certificate may have been issued in advance by the builder, but if you do not have it on hand, or if you have purchased the house as a second-hand house, you will need to request a new certificate.
As a side note, one of the things that even those who work for construction-related companies often do not understand the difference between a specific energy consumption performance improvement house and an energy consumption performance improvement house.
Specified Energy Consumption Performance Enhanced Homes are required to have ZEH level performance, but they do not necessarily have to be “ZEH” homes.
They are only required to meet the applicable standards for the insulation performance grade and primary energy consumption grade.
ZEH homes must meet the performance standards and have primary energy consumption of “0” or less.
Therefore, energy-creating systems such as photovoltaic power generation must be installed.
In other words, a specific energy consumption performance improvement house is a house that has ZEH level insulation performance, etc., but cannot reduce primary energy consumption to “0” or less.
As explained above, homes with improved energy consumption performance are homes that comply with energy conservation standards, but these standards will become mandatory in April 2025.
In other words, new homes for which a building permit application is submitted after that date will be ordinary homes which meet the minimum standards.
As a side note, the government has set a goal of raising the standard for new homes to the so-called ZEH level of energy-efficient homes, or homes with specific energy consumption performance improvements, by 2030.
The details of this are still unknown, but if you are building a new home with an eye on future asset value, it may be a good idea to consider a higher-performance home.
Gain a better understanding of the normal level of performance
A new energy efficiency labeling system will begin in April 2024, which will affect the amount for the mortgage deduction. This means that not only properties for sale, but also rental properties will be required to display their energy efficiency performance.
For the time being, however, it is considered the duty to the seller and lender, and is not imposed on a mediator (agent).
Some mistakenly believe that this means they do not have to take anything into consideration, but that is a premature assumption.
The exemptions are for houses for which an application for building permit was submitted before April 1, 2024, or when a request is received from the general public.
In other cases, when a request is received from a person subject to the obligation to make the efforts (seller or lessor), it is necessary to indicate the energy-saving performance.
It is an “effort” obligation, so it is not mandatory. However, in order to sell quickly, it is a good idea to display the information as a means to differentiate from properties.
This is because an increasing number of people are placing importance on performance as a criterion for purchasing or renting a property.
However, if the insulation performance of the property is low, there is a concern that the listing may have the opposite effect. In that case, you may choose not to list the property.
However, this is not the case for properties for which building permits were applied for on or after April 1, 2024. Even if the insulation performance is low, the obligation to list the property is imposed.
In such cases, reasons such as “the information has not been received” or “the insulation performance figures are poor” will not be accepted.
This is because the information must be obtained and posted by contacting the seller or lessor. Income information is required not only when placing sales advertisements on the company’s own website or portal sites, but also when registering with REINS.
In addition, it is desirable to use the evaluation report to explain energy efficiency and conservation performance during business negotiations, contracts, and delivery to customers.
Due to repeated changes in the law, we real estate agents are now required to have a higher level of knowledge.
Once the law is enforced, “I didn’t know” is no longer acceptable. It is necessary to constantly learn the latest knowledge and respond to it.
Of course, companies and the public are cold to unsuccessful salespeople, even if they have a wealth of knowledge. Therefore, salespeople who can get good numbers, even if the results are the result of a slightly aggressive approach, are given preferential treatment.
However, even if you achieve results while ignoring the established rules, you will not be accepted.
Because this is an industry that requires extensive knowledge, we must not neglect to learn and make full use of that knowledge to achieve results. That is what is most important.
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