To encourage an increase in the supply of housing in the affordable rental market, the government approved a tax shock in the Council of Ministers on Thursday that will grant exemption from IMI, AIMI, IMT, stamp duty and VAT to owners who sell their properties to the public. Affordable Leasing Platform (PAA) or who build new homes for the same purpose. The bill still has to go through parliament. But approval is guaranteed by the socialist absolute majority.
“Those who rent out their property for an affordable rent or decide to build for an affordable rent” will be entitled to a series of tax benefits, Finance Minister Fernando Medina announced.
The government official began by explaining that “there was already a tax exemption for owners who put their properties on affordable leases through the IRS.” Now the government has decided to extend the exemption to the Municipal Property Tax (IMI) which becomes zero instead of the owner having to pay between 0.3% and 0.45% of the asset value. The same benefit will be granted to those subject to the Additional Municipal Property Tax (AIMI), Medina said.
“We will also extend the tax exemption to all those who invest and build homes at affordable rents,” the minister also indicated. Thus, “owners who contract with the state to promote affordable housing will be exempt from the Municipal Property Transfer Tax (IMT)”. That is, those acquiring homes from the state to place them on the affordable rental market do not have to pay that tax at the time of deed.
Similarly, real estate construction contracts for the Affordable Lease Platform will be entitled to zero VAT.
Tax relief for landlords
The government also approved a tax credit for landlords, through the IRS. Thus, income obtained from rent will no longer be taxed at a general rate of 28% and will rise to 25%, the official revealed.
“This rate will decrease as the duration of the leases increases, and for contracts with a term of more than 20 years, the percentage to be paid decreases from 10% to 5%,” explains Fernando Medina.
Under the current regime, landlords with contracts of up to two years pay 28% on the rent received, which will rise to 25% for leases of up to five years.
At the moment, a rate of 26% applies to rental periods between two and five years, and this drops to 15% for rental contracts between five and ten years.
Between 10 and 20 years, the landlord pays 14% and 10% is taxed on this account.
Finally, for contracts with a term of more than 20 years, a fee of 5% applies.
Fernando Medina also announced additional measures, such as “IRS capital gains exemption” on the sale of real estate to the state, but also between private individuals, if it is at an affordable rent.
Landlords will also be able to “deduct income protection insurance from the IRS” if they place their homes on the rental market at a controlled cost, the official also indicated.
Urbanized land will be penalized
On the other hand, “rustic buildings”, that is, land, “with building capacity” can exacerbate the IMI, the finance minister said. Fernando Medina explained that the proposed law “gives autonomy to municipalities to levy the tax” they see fit.
Then the Prime Minister, António Costa, clarified that these are “emerging lands, which are in the urban fringe, are urbanizable, but are waiting to increase in value without anything happening”. This is “the best-known speculation mechanism, land in many cities being resold without generating value for families”. But “since soil is finite, its use cannot be completely free,” he found.
Salomé Pinto is a journalist for Dinheiro Vivo
Source: DN
