In order to encourage renting, the Mais Habitação program includes several tax benefits for landlords. Know what they are.
The Government recently presented the More Housing programwhich includes a set of measures to address the constraints related to housing in Portugal.
The program was launched in February, has already been in public consultation and, since then, new measures have been framed. Although many of them have already been approved by the Council of Ministers, they will still have to pass through the scrutiny of the Assembly of the Republic before arriving in Belém.
As one of the main objectives of this program is to stimulate renting, landlords are directly targeted. Therefore, if you have rented houses, be aware of the impact that Mais Habitação may have on your pocket.
More Housing Program: tax advantages for landlords
IRS reduction on lease
According to the bill it turns out that there is a significant tax relief for current landlords and for those who want to put houses on the rental market.
In this way, the Mais Habitação program proposes the progressive reduction of the IRS rate at which property income is taxed, depending on the duration of the lease. In this way, there is a reduction of the general rate from 28% to 25% for leases of up to 5 years.
If the lease is for five to 10 years, the rate drops to 15%. Between 10 and 20 years, the IRS rate drops to 10%. For landlords with leases of more than 20 years, the IRS rate applied on property income is now 5%.
Reductions and exemption from IMI and IMT
In addition to a more favorable IRS taxation framework, the More Housing program also brings discounts and even exemptions on other taxes such as the Municipal Property Tax (IMI) and the Municipal Tax on Real Estate Transfers (IMT) for who designs or builds affordable rental properties.
In relation to the IMT, remember, this exemption already existed. Now, these landlords are also exempt from paying IMI.
In addition, landlords who enter into housing development contracts with the State will not pay IMT, Stamp Duty and VAT on construction works.
Direct stimulus to leasing through the conversion of the AL
Measures related to Local Accommodation (AL) were among the most controversial. However, the Mais Habitação program law was smoother and more balanced after the public consultation.
For landlords who want to convert Local Accommodation units into houses for stable and longer-term rental, they also have tax benefits.
Landlords who wish to do so can carry out this conversion until the end of 2024. The benefit for this conversion involves exemption from IRS on property income.
Exemption from IRS and IMI for old rents
Landlords who still have properties under the old rent regime will not pay IRS and IMI for their property income.
Exemption from capital gains on sales to the State
Another tax measure that could prove to be very attractive is the IRS exemption on capital gains obtained from the sale of houses. But beware, you will only be able to access this exemption who sells real estate to the State, which will rent it out at affordable prices.
Sales between individuals in which the sale value is reinvested in real estate and these are intended for affordable housing can also take advantage of this tax advantage.
Exemption from capital gains on the sale of property to pay mortgage loans
There is also an additional way of obtaining exemption from the IRS of capital gains for the sale of real estate: if that sale serves to amortize permanent housing credits of the owner or his descendants.
Return of income insurance to the IRS
Added to these measures is one more: the return of income insurance to the IRS. This benefit is also intended for landlords who place houses on the rental market. These insurances are therefore deductible from category F gross income.
Creation of a Single Leasing Counter
The Mais Habitação program also foresees the creation of a One-Stop Lease Desk. This is a more transversal measure, but one that can have some impact for landlords. The aim is to implement an integrated system for accessing information on leasing for tenants and landlords.
Communication of contracts by tenants
This is a more indirect impact and has to do with the possibility for tenants to communicate lease contracts to Finance, something that until now was the responsibility of landlords.
Special contribution to local accommodation
For landlords who decide to keep the Local Accommodation there is an additional contribution of 20%. The amounts from this fee, according to the Mais Habitação program “are intended for the IHRU – Instituto da Habitação e da Reabilitação Urbana, to finance affordable housing policies and which vary according to operating income, the evolution of rents and the weight of local accommodation in the area.”