The rise in interest rates, which should continue at an upward pace in the coming months, prompted the government to design a series of measures for households to respond to the sharp rise in mortgage payments. In the proposed government budget for 2023 (OE2023) there is no concrete support at this level, but it is assumed that families can turn to the employer or the bank to mitigate the increases. Most emblematic is the opportunity for employees with credit for the purchase of their own and permanent home and a gross monthly salary of up to 2700 euros to benefit from a step-by-step reduction of the automatic discount of the IRS step – but the state does not grant an exemption from the interval: the settlement takes place at the end of the year.
According to the document, “the withholding tax on IRS Category A income is reduced to the rate of the step immediately lower than that corresponding to the taxpayer’s monthly fee.” In order to access this support, the approximately 1.4 million potential beneficiaries will have to inform their employer about the possibility of reducing the withholding tax foreseen before payment of the salary, by means of a statement accompanied by the essential elements to enable the verify the above conditions, as well as any other tax-relevant information that arises thereafter,” the document reads.
Families opting for this solution will have to settle this tax in 2024, when filing with the previous year’s IRS. And this may involve a smaller refund or even the payment of the difference. The government estimates the cost of the postponement at 250 million.
Also to mitigate the effects of the rise in Euribor rates, the government wants to oblige banks to renegotiate credit agreements with holders when they request or expect an effort rate above a certain level, whereby the possibilities of refinancing, extending the maturity, rate type change and credit consolidation. OE2023 states that banks will have to periodically assess the evolution of households’ efforts in variable rate contracts and, in the event of a significant deterioration, and if the conditions are met, are obliged to submit proposals to customers. It will also allow families to make early repayments without paying any repayment fees.
Tax reduction on rent
As part of housing support, OE2023’s proposal includes a cap on rent increases to 2% – what would otherwise be 5.43% – to mitigate the effects of the rise in the cost of living for families. In order to compensate the owners of rented properties – it is estimated that this measure will cover about one million families/houses – the government has proposed tax breaks under the IRS and IRC. Landlords with an applicable tax rate of 28% in the IRS have a support coefficient of 0.91. The benefit gradually decreases after the current rate has been lowered. At the IRC level, the support coefficient is 0.87.
In the director’s accounts, this fee will cost 45 million. Outside this ceiling for updating rents, there are the leases executed this year and those from before 1990. In the old rents, the cabinet again promises to evaluate the current urban rent regime based on data already known from the 2021 Census.
Within the housing policy, the college wants to prioritize “four major objectives” in the coming year, with a view to suppressing undignified living situations, increasing the supply of affordable rental housing, upgrading the social housing stock and creating a network of emergency. – and transitional housing reactions.
Sónia Santos Pereira is a journalist for Dinheiro Vivo
Source: DN
