A week after approving a broad package of measures aimed at investment and management of public assets, the Portuguese Government approved a new package of measures with fiscal impact. In the statement issued by the Council of Ministers on 26 September, the Government explains that this measure aims to "boost and strengthen the housing supply" by "simplifying rental processes and creating tax incentives for private housing supply".
In this context, the Government approved a draft law that provides for a set of measures, including "the application of a reduced VAT rate on the construction of housing for sale at moderate prices or for rent at moderate rents and a tax incentive scheme for investments in the construction, renovation or acquisition of properties for rent at moderate prices".
According to Prime Minister Luís Montenegro, speaking during the Council of Ministers meeting, construction will benefit from "the application of a 6% VAT rate for housing construction projects with a sale value of €648,000". This reduced rate will also apply to construction for rental, where rents do not exceed €2,300.
Around €648,000 for sale and €2,300 for rent are figures that are part of "the concept we are bringing to our housing policy, which is the concept of access to moderate prices," stressed the First , explaining that "in the municipalities under the greatest pressure [the metropolitan areas of Lisbon and Oporto], we are talking about a ceiling that gives the middle class and families a new possibility." This will be a temporary regime, in force until 2029. After these four years, "it will be reviewed by the government that succeeds us, whether it is made up of the same political forces or others," he explained.
Alongside these measures, the government also approved a draft law authorising legislative changes to the Personal Income Tax Code (CIRS), in order to establish incentives for the rental and sale of moderately priced housing, with the aim of encouraging the placement of properties on the market for rent and sale within a moderate price range, covering the housing needs of the middle class in different areas of the country. Thus, for tenants, an increase to €900 in the income tax deduction for moderate-priced housing rents is established, already in 2006, which will rise to €1,000 in 2027. For landlords, and as a way of encouraging the placing of houses on the rental market, there will be a reduction in the income tax rate from 25% to 10% on rental contracts for moderately priced housing. The other change determines the end of capital gains tax on the sale of houses if the value is reinvested in properties for rental at a moderate price.
Although not described in the Council of Ministers' statement, the Prime Minister also shared two other tax-related decisions. "An increase in the Municipal Tax on the Transfer of Real Estate (IMT) on the purchase of housing by citizens not resident in Portugal, excluding, of course, our emigrants, to whom this increase will not apply". And the exemption from the Additional Municipal Property Tax (Adicional ao IMI) "in the case of homes placed on the rental market for up to €2,300".