2016: Deduction of mortgage interest on Tunisia
On easing the acquisition or construction of premises for residential use.
Article 26 of Law No. 2015-30 of 18 August 2015 concerning supplementary budget law for 2015 has eased the acquisition or construction of local operations for residential use. This note is to remind the tax legislation in force until 31 December 2015 and to comment on the new provisions on the matter.
1.Législation in force until 31 December 2015
Under the provisions of paragraph 4 of paragraph I of Article 39 of the Tax Code on personal income and corporate tax, individuals have the right to deduct, for the determination of their income taxable net interest loans for the acquisition or construction of social housing within the meaning of the legislation on interventions in the housing promotion fund for employees, either individual or collective housing which the area covered only not exceed 100 m2 and the cost does not exceed 67.500D. The deduction takes place from the base of the withholding tax for employees and pensioners.
2.Apport of the Finance Act 2015
2-1 Contents of the extent Article 26 of the Supplementary Finance Law for 2015
extended the above deduction for interest paid on loans for the acquisition or construction of other residential premises of categories. The deduction also covers the profit margin paid under the Murabaha sale contracts.
2-2 Conditions for the benefit of the deduction earnings of the above deduction is subject to the following conditions:
- It must be a local for residential use, the cost of acquisition or construction including dependent parts (gardens, cellars, garages ...) and independent parties (cellars, parking places ....) even when they are the subject of separate contracts does not exceed 200,000 dinars;
- It must be an acquisition or construction of a single local for residential use;
- Credit the beneficiary must not be owner of another local for residential use on the date of the deduction even condominiums, and even if the total value of the first and second housing does not exceed 200,000 dinars.
2-3 credits and interests affected by the deduction and deduction rules
at. Credits and interests affected by the deduction
a.1. relevant appropriations
The measure applies to loans granted by individuals and entities authorized to grant mortgage loans (credit institutions, social funds, employers ...). On this basis, the measure does not apply to:
- Appropriations for land acquisition;
- Other loans (consumer, layout ...).
a.2. Interests affected by the deduction
The deduction takes place within the limits of interest charges on or amortization tables and counted in accordance with the limits prescribed by the regulations on the granting of mortgages for loans from more than one person or an organization (banks, social funds, employers ...), and, subject to the conditions and limitations of the aforementioned credits. The deductible amount of income a year, in any case, equal to the interest or profit margin, related to that year.
Furthermore, the deduction applies only to interest on loans for premises used for residential property of the borrower.
On this basis:
- The deduction is made, in case of joint ownership, for each co-owner within the limits of the proportionate share of interest on its rights in the building, and that, notwithstanding the possibility for one of the co-owners to benefit or not interest deduction corresponding to its rights in the property;
- Interest paid by a person for the acquisition or construction of a Dwelling room in which it does not have property rights are not deductible, it is the case of interest paid in execution of bail.
Furthermore, the deduction does not apply in all cases:
- The principal of the credit;
- The interest on a loan for the acquisition or construction of a residential use local costing more than 200,000 dinars even if the credit amount is less than 200,000 dinars;
- Expenses incurred by the borrower to obtain credit, such as insurance, registration fees, ...;
- Management fees such as commissions for file review, the commissions due to the early repayment of credit, ...;
- Default interest payable in case of payment of credit installments out of time.
b. Terms and proof of deduction
b.1 Terms of deduction
The interest deduction or the profit margin applicable:
- When determining the basis of the deduction at source payable in respect of income tax for employees and pensioners, and
- When determining the total net income taxable for individuals performing other types of income.
b.2 Evidence of deduction
The deduction is subject to the submission of the following:
- A sworn statement of not owning a local alternative for residential use;
- Table or the depreciation tables or credits;
- A copy of the purchase contract or evidence supporting the construction costs based on which the loan was granted;
- A bank certificate of residence for employees and pensioners;
- A certificate issued by the person or the lender proving the actual payment of the amounts subject to the deduction for others.
2-4 Date of application of the measure The above deduction applies to amounts due on or after 1 January 2016.
Thus, the deduction covers:
- The interest on loans or the profit margin on Murabaha financed acquisitions, due from January 1, 2016 and payable in respect of loans granted before that date;
- Interest or profit margin on Murabaha financed acquisitions, due under loans granted from 1 January 2016.