The Council of Ministers recently approved (on May 23, 2024) a set of measures aimed at youth, in areas such as student accommodation, scholarships for working student, health, housing and taxes. This set of measures is part of a program that the Government called "You Have a Future in Portugal".
In this article we only detail the measures with a predictable immediate impact on the real estate sector in Portugal and housing, in particular.
The approved measures aim to creating mechanisms that enhance and facilitate the acquisition of housing properties by young adults, with a framework being defined up to the age of 35.
The reasons behind these measures are these:
Young adults naturally have few years in the job market and, consequently, are less likely to have higher levels of income and savings.
For this reason, they are less prepared to respond to the need to have sufficient equity capital to pay the taxes that arise from the acquisition of a property (the IMT - or Municipal Tax on the Onerous Transfer of Properties - and the IS - or Property Stamp Tax), in addition to the obligation to have at least 10% of the property's purchase value (since banks are only authorized by Bank of Portugal to finance the acquisition up to a maximum of 90%).
Therefore, the Government outlined measures to support young adults in overcoming these obstacles, namely:
Exempt from IMT the acquisition of an urban building (house) or autonomous fraction of an urban building (apartment), if:
intended exclusively for own and permanent housing,
this is the first acquisition of property for this purpose,
by buyer who is up to 35 years of age,
up to an acquisition value of €316,272 (4th IMT bracket),
but allowing for properties above €316,272 and up to €633,453 to maintain the maximum exemption from the previous level, with no exemption for properties with a higher value.
Exempt from Stamp Tax the acquisition of an urban building (house) or autonomous fraction of an urban building (apartment), if:
intended exclusively for own and permanent housing,
this is the first acquisition of property for this purpose,
by buyer who is up to 35 years of age,
up to an acquisition value of €316,272,
for properties above €316,272, the remaining tax amount is due.
Exempt from Fees (including on the registration of mutual and mortgage) the registration of the acquisition, by transfer for consideration between living persons, of property with a Tax Asset Value of up to €316,772.
Provide a public guarantee on the purchase of the first home, that is, a guarantee granted by the State to credit institutions when the following conditions are met, cumulatively, for the first transaction of own and permanent housing:
The borrower(s) of the contract are between 18 and 35 years of age and have tax domicile in Portugal;
The borrower(s) of the contract enjoy income that does not exceed the 8th income tax bracket (€81,199 per year, at the current date);
The borrower(s) of the contract are not owners of an urban building or autonomous fraction of an urban residential building;
The borrower(s) of the contract have never taken advantage of the State's personal guarantee under this statute;
The transaction value does not exceed 450,000 euros;
The State's personal guarantee does not exceed 15% of the transaction value of the urban building or autonomous fraction of an urban building;
It is The State's personal guarantee is intended to enable the credit institution to finance the entire transaction price of the urban building or autonomous fraction of an urban building.
Now, what savings could this mean for someone who fits the aforementioned conditions? Let's look at the following examples:
Scenario A: purchase of housing for €200,000
Savings in IMT: €3,977.58
Savings in IS: €1,600.00
Savings on fees: between €245 and €500
Added to this is a possible guarantee provided by the State to the financing bank around €20,000 (10%) to €30,000 (15%).
Scenario B: purchase of housing for €350,000
Savings in IMT: €12,116.62 (but the buyer will already have to pay the difference to €14,809.86, i.e. €2,693.24)
Savings in IS: €2,530.18 (but the buyer will already have to pay the difference to €2,800.00, i.e. €269.72)
Savings on fees: between €245 and €500
Added to this is a possible guarantee provided by the State to the financing bank in the order of €35,000 (10%) to €52,500 (15%).
Scenario B: purchase of housing for €500,000
Savings on IMT: €12,116.62 (but the buyer will already have to pay the difference to €26,809.86, i.e. €14,693.24)
Savings in IS: €2,530.18 (but the buyer will already have to pay the difference to €4,000.00, i.e. €1,469.72)
Savings on fees: between €245 and €500
In this case, the State will no longer provide any guarantee, as the value of the transaction exceeds €450,000.
Initially, the exemption request will have to be made in person at the Finance services.
The Government will financially compensate municipalities for this loss of revenue.
These measures will still have to pass the Parliament's scrutiny, but the Government intends that all these measures come into force on August 1, 2024.
[Sources: Idealista and Government Portal (portugal.gov.pt)]
Do you need additional clarification? Don't hesitate to contact me:
Marco Moura Marques
+351 967035966
Comments