This week, National Association of Realtors President Chris Polychron and Puerto Rico Association of Realtors President Edgar Morales sent a letter to the island’s House of Representatives to show support for Bill 2566, which would exclude real estate brokerage services from the commonwealth’s Sales and Use Tax and the Value Added Tax.
“This legislation recognizes that a tax on brokerage services is a tax on homeownership,” said Polychron. “Instead, we should strive to lower barriers for middle-class families looking to buy or sell a home.”
“Bill 2566 is important to the business of real estate and the general economy, and Realtors stand squarely behind it,” he said.
The letter on behalf of 400 members of the local organization and more than a million members of the stateside trade group, noted that while most U.S. states impose a sales tax on at least some services, very few states apply these taxes to real estate services. Studies from the National Association of Realtors and the Texas A&M University Real Estate Center confirm that adding a tax on real estate brokerage services would have a detrimental effect on the housing industry, the groups stated.
“The Puerto Rico Association of Realtors is grateful for the work that’s been done so far on Bill 2566,” said Morales. “This bill will help support homeowners and prospective buyers in Puerto Rico and recognizes the important role that real estate plays in our economy.”
The new taxes would have a negative impact on middle-class families who are striving to buy homes and contribute to the Puerto Rican economy, the trade groups said.
“Taxes on commercial real estate brokerage would also pose a threat to future economic development by adding to the cost of business operations in Puerto Rico,” they said in the letter.