Jan 10 (Reuters) - Japan government will give cash benefits to eligible home buyers, expecting it to reduce the impact of an upcoming increase in the consumption tax, the Nikkei reported.
Under the plan, existing mortgage tax breaks, which are due to expire at the end of this year, will be extended beyond 2014, the business daily said.
The cash payment program will cover home buyers who are moving into their homes after the consumption tax is raised to 8 percent from 5 percent in April 2014, the Nikkei said.
The government is looking to raise the cap on maximum mortgage bill deduction on tax payment to at least 300,000 yen ($3,400) annually from 2014, the Japanese daily reported.
The cap is set to drop to 200,000 yen this year, the Nikkei said.
The maximum mortgage deduction from residential tax would be increased above the current 97,500 yen a year under the plan. The government would then pay cash to those who still could not fully benefit from the mortgage tax breaks, the business daily said.
However, those with income tax liabilities of less than 100,000 yen annually will not be able to take full advantage of the program at the 300,000 yen cap, the Nikkei said.
The proposed hike in the consumption tax is seen by analysts as a crucial step needed to avoid a credit rating downgrade.