“For the ALP, the ‘red lines’ are the Additional IMI tax and frozen rents,” explained Diana Ralha in a statement.
In the legislative proposals aimed at resolving the housing crisis presented by the Government to the parliament, the payment of the Additional to IMI (AIMI), also known as the ‘Mortágua tax’, is only omitted for investment rental contracts (‘built to rent’) with durations up to 25 years, where at least 70% of the construction area is designated for housing at rent values defined by the Government as moderate.
“Exempting the AIMI just in ‘built to rent’ is not enough,” declares the director of ALP, advocating the abolition of the tax for all real estate owners.
The AIMI applies to individual taxpayers whose real estate assets exceed 600,000 euros.
Regarding the freezing of rents prior to 1990, estimated by the ALP to affect 100,000 contracts with rents below 130 euros monthly, “there is not a word in these proposals, there is no government intention to address this issue,” according to Diana Ralha.
“The Government’s fiscal shock is positive, but it is insufficient,” remarked the ALP director, recalling that long-term rents already pay a 10% IRS rate but “failed” to resolve the housing crisis, just as the affordable rental program “also failed.”
The proposals submitted by the Government to the Assembly of the Republic correspond to a legislative authorization allowing Luís Montenegro’s executive to amend the VAT Code, the IRS Code, the Statute of Tax Benefits, and the IMT Code to promote the supply of housing at more affordable prices.
The bill to reduce VAT in the construction of homes for sale or rent at moderate prices grants the tax authority 150 days to refund the difference between the VAT of 23% and 6%, if the owners build or rehabilitate properties designated for housing and sell the house for up to 648,000 euros or rent the property with a monthly rent not exceeding 2,300 euros.
To increase the housing supply, the executive proposes that homeowners who sell a house be exempt from IRS on capital gains if they reinvest the earnings in properties for rental housing.
The proposal also includes a reduction of the autonomous IRS taxation rate applied to incomes derived until 2029 from residential lease and sublease contracts.
Instead of the current 25% rate, the executive seeks parliamentary authorization for 10%, if the rent remains within the limit defined as a moderate price by the executive (2,300 euros monthly).
In cases where properties are held by companies, the executive stipulates that only half of the rental income counts towards corporate tax.
