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REQUIREMENTS FOR THE APPLICATION OF TAX BENEFITS FOR SOCIAL HOUSING PROJECTS

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REQUIREMENTS FOR THE APPLICATION OF TAX BENEFITS FOR SOCIAL HOUSING PROJECTS

Income Tax  

By means of Revenue Ruling No. 8248 of 2018 Colombian Tax Authority referred to the requirements in order to apply tax benefits for social housing projects

 

Section 235-2 of the Colombian Tax code establishes that in the case of social housing projects, the profit generated from: (i) the disposal of the property destined to the project; and (ii) the first sale of housing projects, is exempted for income tax purposes.  The Tax Administration explained by means of Revenue Ruling No. 8248 of 2018, that the first profit out of the sale of social housing is exempted if the following conditions are met: (i) the construction license establishes that it is for a social housing project; (ii) the properties must be contributed to a trust with the sole purpose of developing social housing projects; (iii) the entire project must be carried out through the trust; and (iv)the term of the trust cannot exceed 10 years. Additionally, the Tax Authority clarified that the profit out of the disposal of the property destined to the development of social housing projects is exempted if the taxpayer meets the requirements mentioned in items (i) and (ii).