Following the "More Housing" Programme, a series of measures will come into force that contemplate, among the various axes, the increase in the available housing supply. The demand for affordable housing is growing and, in this scope, the Government has prepared some trump cards. We are talking specifically about the IRS exemption on capital gains that result from the sale of property to the State, municipalities and Autonomous Regions. Thus, the number of public dwellings will increase and it will be possible to promote affordable rentals. This is a proposal that will be debated in Parliament already next week, on the 19th of May.
According to the Proposed Law No. 71/XV/1st: "gains resulting from the sale for consideration, to the State, to the Autonomous Regions or to the local authorities, of residential property will be exempt from personal and corporate income tax". Currently, 50% of the value of capital gains is subject to the progressive IRS rates, so there would be an exemption from this tax. However, two exceptions are provided for:
- When from the sale of a property to the State the gains realised are obtained by residents with tax domicile in a territory, region or country subject to a more favourable tax regime - offshore.
- When the gains realised from the sale of property to the State are derived from property situated in an urban rehabilitation area. In this case the council can activate its pre-emption right.
The law also states that income which is exempt from the payment of IRS on capital gains is "compulsorily aggregated for the purposes of determining the rate to be applied to the remaining income".
If you sell your house (which is not your own residence property) to amortise the mortgage of your own permanent property, you can also benefit from the exemption of capital gains. The Government has already announced its intentions to suspend the 36-month period between the sale of a property and the reinvestment in another one, giving families more time to invest the capital gains in the purchase of another home of their own. However, to ensure the IRS exemption, before the sale, the property will have to have been "the taxpayer's own and permanent home or that of his family, as proven through the respective tax domicile, in the 24 months prior to the date of transfer".
However, those who made this transaction in the year in which they made the gains and in the three previous years cannot benefit from the capital gains exemption, unless they can prove "exceptional circumstances".
Tax exemption for accessible renting
According to the Government note, housing placed on the market under the Affordable Housing Programme will now benefit from zero taxation. To these will be added zero taxation in terms of IMT and IMI, provided that these are actually intended for affordable housing. In terms of taxation, the Government explains that "a zero taxation rate on property income will be applied to all owners of local housing that during 2023 to 2024 decide to move from local housing to the rental market, until 2030".
As for the taxation that results from property income, there will be a decision of the general tax rate, which will go from 28% to 25%. This rate, applicable to contracts between 5 and 10 years, will fall from 23% to 15% for IRS purposes, while in contracts between 10 and 20 years, the rate will fall from 14% to 10%. In contracts with a longer duration, over 20 years, the rate will go down from 10% to 5%.