Investors in rental housing will benefit from tax incentives and compensation if legal changes affect long-term contracts.
Source: Adobe Stock
Author: Redaction
Rental contracts with legal protection
The new investment contracts for rental housing (CIA) are part of the housing tax package and are aimed at institutional investors developing homes for rent at moderate prices. The scheme provides significant tax benefits and an additional safeguard: if legislative changes affect the balance of rental contracts, investors may be entitled to compensation.
This investment model in rental housing was designed for large-scale projects aligned with the build to rent concept and allows long-term contracts with the State through the Institute for Housing and Urban Rehabilitation.
Tax benefits in rental housing
Investment contracts for rental housing offer a set of tax incentives designed to encourage the construction of rental housing. Key advantages include exemption from IMT, exemption from AIMI and reduced VAT on the construction or renovation of properties intended for the rental market.
Rental investors also benefit from IMI exemption for several years and a subsequent reduction throughout the contract. Under certain conditions, partial VAT refunds may also apply for architecture and engineering services linked to rental projects.
To access this investment scheme, developers must ensure that at least 70% of the built area is allocated to rental housing and that rents fall within moderate levels defined by the regime.
Conditions of rental contracts
Rental investors must comply with strict requirements, including technical and management capacity, organised accounting and a regularised tax situation. These rental contracts also require maintaining the residential purpose of the properties and their exclusive use for rental or subletting.
The scheme prevents asset sales without transferring the contractual position and requires full cooperation with public entities responsible for monitoring rental contracts, such as IHRU.
Non-compliance and loss of tax benefits
Failure to comply with rental contracts may lead to the termination of the CIA and the loss of tax benefits granted. In such cases, rental investors must repay the incentives received, in full or in part, depending on the timing of the breach.
The rules also set payment deadlines and apply compensatory interest in case of non-compliance, reinforcing the binding nature of investment contracts for rental housing and ensuring greater legal certainty.
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