(DR) Ministry of Infrastructure and Housing
Miguel Pinto Luz, Minister of Infrastructure and Housing
The government proposal wants to lower 25% to 10% the IRS rate to landlords that practice incomes up to 2300 euros monthly. On the Tenants’ side, the maximum deduction of income rises from 700 to 900 euros.
After last year already tried to include this concept in the Soil Law, the government really wants to advance with the Introduction of “Moderate Value” in the housing sector.
The new version defines as “moderate value” the sale of houses up to 648 022 euros or monthly lace up to 2300 eurosprovided that the contracts have a minimum period of three years. The goal is to create tax incentives that encourage owners to make more properties available for housing.
The proposal includes three fiscal support mechanisms. The first goes to the landlords: those who practice “moderate” income can benefit from a Reduced IRS rate of 10% on incomeinstead of the current 25%, if it opts for autonomous taxation. In the case of companies, half of the building income will be excluded from IRC taxation.
The second incentive applies to construction. Housing projects intended for sale or lease within the “moderate value” limits will have access to Reduced VAT rate of 6%.
The third refers to the added value: owners who sell real estate and reinvise the amount, within five years, in homes intended for “moderate” lease will be exempt from paying tax on these added value. The government still studies the details, such as the minimum period of lease agreements to access this exemption.
With this reform, the executive intends to replace the concept of “accessible lease” with “moderate lease”, although it continues to keep the lease support program in force (PAA). Currently, only 2700 contracts are covered by this regime, less than 0.5% of the total. In PAA, landlords who practice income 20% below the median of the county continue to benefit the total exemption of IRS or IRC.
On the lease side, the only news is the increase in the maximum deduction of income in the IRS: upon 700 to 900 euros in 2025 and will reach 1000 euros in 2027.
At the same time, the government promises to simplify licensing processes for housing construction, reducing the deadlines of the city councils and adjusting rules of public hiring.
Without a majority in Parliament, the government will now have to negotiate support to enable all these measures.
“It will be a catastrophe”
The concept of “moderate value” does not include differences in typology or location. Thus, a T0 leased by 2300 euros in Lisbon or a housing sold by 648 thousand euros in a small village in the interior enter the same category, which is raising criticism of the proportionality of the measure.
“We do not know if the moderate price is moderate to the Portuguese reality. Minimum salary that does not reach 900 euros or average salary that is just above 1500 euros, ”says Pedro Ventura from the Lisbonian tenant association.
It is also recalled that when the concept of moderate value was initially proposed with the Soil Law, it was anticipated to open the door to real estate speculation in 95% of municipalities. An analysis made by the time concluded that this change would allow us to practice housing sales higher than the market in 295 of the 308 Portuguese municipalities. The measure eventually fell from the final proposal of the Soil Law for not having the support of any other party.
“It allowed the House prices increase more than 25% of the current price. Now, if it is this concept that the government wants to apply, this will be a catastrophe, ”says André Escaval of the door to door movement.
Still, Housing Minister Miguel Pinto Luz believes incentives will increase supply and regulate prices. “It is the market that will control”He summed up.
