In the first part of this article I listed the measures of Bill 71/XV/1 with a special focus on the promotion of Affordable Housing, Renting and Local Accommodation.
If you haven't read it yet, you can read the 1st part of this article here: <...........................................................................>.
In this second part I will list the measures that affect Purchase for Resale, Golden Visas, Real Estate Capital Gains, IMI and some additional Tax Benefits. We have known since August 21st that the President of the Republic vetoed this proposal, sending it back to Parliament.
And I will also list the main measures of Bill 77/XV/1, which aims to simplify urban licensing processes. This proposal was promulgated by the President of the Republic on August 21st.
I continue to try to answer the question that many ask themselves: “More Housing, but what package is this anyway?”.
PURCHASE FOR RESALE
Limitation of IMT exemption when purchasing for resale
The period for property purchased for resale to be resold is reduced from 3 years to 1 year.
In a scenario where you have already benefited from exemption, the tax becomes due from the acquisition, plus compensatory interest, if:
the building acquired for resale is given a different destination;
the building is not resold within 1 year;
the building is resold again for resale.
When the building is resold within 1 year, without being resold again, and tax has been paid, it can be canceled by the head of finance, at the request of the interested party, accompanied by the document proving the transaction.
GOLDEN VISAS
Revocation of the Golden Visa Program
New applications for granting residence permits for investment activities (ARI) are not accepted, under the provisions of paragraphs 1 and 2 of art. 90º-A of Law 23/2007, from the date of entry into force of the Proposed Law.
This means:
Renewals of ARIs granted under the current regime will not be affected.
However, the renewal determines the conversion of the residence permit into a residence permit for entrepreneurial immigrants:
in the 1st year there must be a minimum stay of 7 consecutive or interpolated days;
In subsequent 2-year periods there must be a minimum stay of 14 days, consecutive or interpolated.
Grants for renewing residence permits for family reunification are safeguarded.
New requests for ARI are accepted, as long as a statement has been issued, prior to the entry into force of the Bill, by "GEPAC" (Cultural Strategy, Planning and Assessment Office), attesting to the effective transfer of capital (investment equal to or greater than 250 thousand euros).
Pending requests for ARI remain valid as long as:
are awaiting a decision from the competent authorities on the date of entry into force of the Bill;
are pending prior control procedures in the Municipal Chambers, on the date of entry into force of the Bill.
REAL ESTATE CAPITAL GAIN
IRS or IRC exemption
Capital gains resulting from the sale of residential properties to the State, Autonomous Regions, public business entities in the area of housing or to local authorities are exempt from IRS or IRC taxation.
With exception:
of gains made by residents with tax domicile in a country, territory or region subject to a more favorable tax regime, included in the list approved by order of the member of the Government responsible for the Finance area;
of gains arising from costly disposals through the exercise of the preemptive right.
Change to the criteria for IRS tax exemption on real estate capital gains in a scenario of reinvestment in own and permanent housing:
The property sold must have been used as the taxpayer's own and permanent home for the taxpayer and his family in the 24 months prior to its sale, to be proven through the respective tax residence.
The taxpayer cannot have benefited from this regime in the previous 3 years.
Another change to the IRS tax exemption criteria on real estate capital gains:
In a scenario of capital gains derived from the sale of land for construction or residential properties that were not intended for the taxpayer's own or permanent home, an exemption regime is created, provided that, cumulatively:
the realizable value is applied to the amortization of outstanding capital in housing loans intended for the taxpayer's own permanent home or that of his descendants; and
the amortization is completed within a period of 3 months from the date of completion;
the exemption applies to transmissions made between 01/Jan/2022 and 31/Dec/2024;
for transfers carried out before the Bill comes into force, amortization must be completed within 3 months after the Bill comes into force.
IMI
IMI exemption
On land for housing construction whose prior control procedure for construction work on properties for housing purposes has begun, but for which a final decision, express or tacit, on the procedure has not yet been issued.
Regarding buildings in which the procedure for prior control of construction works has begun, and for which there has not yet been a final decision.
Taxable persons who have purchased the building from an entity that has already benefited from it do not enjoy the exemption regime.
Expansion of the concept of land for construction
Within the scope of the IMI Code, it includes those that have been communicated by municipalities to the Tax and Customs Authority as suitable for construction under the terms of the applicable territorial management instruments.
Municipalities may request that urban buildings that do not constitute an autonomous fraction of a building under a horizontal property regime, as well as urban buildings in ruins, be assessed as construction land, for the purposes of determining their Tax Asset Value (VPT).
Aggravated IMI rates
Whenever they are located in areas of urban pressure, urban buildings or autonomous fractions that have been vacant for more than a year, buildings in ruins, as well as construction land located on urban land and whose Qualification in a municipal territorial planning plan attributes suitability for housing use.
Revocation of the extension of the start of IMI taxation
The rules relating to the extension of the start of IMI taxation are revoked in cases where construction land or buildings are included in the inventory of the company whose purpose is their construction and/or sale.
OTHER TAX BENEFITS
Revocation of IRC exemption in real estate investment funds
Revocation of the reduced IRS rate of 5% on capital gains and property income obtained from the sale and rental of properties following urban rehabilitation operations.
Revocation of IRS and IRC tax exemption on property income obtained within the scope of municipal programs offering affordable housing rental and children's accommodation
BILL 77/XV/1
Objective: Simplification of urban licensing processes
Simplification of urban elements
Elimination of licenses through new cases of exemption or exemption from prior control by municipalities:
Alteration works inside buildings or their fractions that do not affect, maintain or reinforce the stability structure and that do not involve changes to the heights, the shape of the facades, the shape of the roofs and/or coverings and that do not involve the removal of tiles from the facade regardless of its confrontation with public roads and public places.
Reconstruction works that do not result in an increase in the height of the facade, even if they involve an increase in the number of floors.
Subdivision works in an area covered by a detailed plan with registration effects.
Urbanization works, land remodeling works, construction, alteration or expansion works.
Works or interventions in cultural assets.
Reconstruction works in areas subject to easement or public utility restrictions.
Urban operations preceded by “sufficiently accurate” favorable prior information.
Tacit approval for construction permits
If the decisions have not been adopted within the due deadlines, the individual will be able to carry out the intended project.
In cases where tacit approval occurs, payment of fees is not a condition of effectiveness.
In case of tacit approval, the deadline for completing the work is that proposed by the applicant, starting with the date of payment of the fees.
Mechanism for certifying tacit approval through the issuance of a certificate obtained in an electronic procedure.
Counting and suspension of deadlines
The counting of deadlines always starts with the date of the request and not at an intermediate point in the procedure.
Requests for elements, clarifications, additional elements or information may only be requested once and in a concentrated manner.
If the individual responds within 10 days, the decision period is not suspended.
If there is no preliminary rejection or invitation to correct or complete the request or communication, the request or communication is considered to be correctly prepared, and the request cannot be rejected based on its incomplete instruction.
Elimination of the construction license permit
Replaced by receipt of payment of fees due.
Expansion of the effects of Favorable Prior Information
The licensing application or the presentation of favorable prior communication may be submitted within two years after the favorable decision on the prior information request.
The general rule will be that prior information is favorable, together with a declaration by the authors and coordinator of the projects that they respect the limits set out in this prior information, which has the effect of exempting the urban planning operation in question from prior control.
Electronic Platform for Urban Procedures that will allow, among other features:
submit applications online;
consult the status of processes and deadlines;
receive electronic notifications;
obtain certificates of exemption from urban planning procedures;
standardize procedures and documents required by municipalities, avoiding the multiplication of different practices and procedures;
future submission of requests in Building Information Modeling (BIM) format, with automation of verification of compliance with applicable plans.
Municipal regulations and limitation of the powers of municipalities with regard to the assessment of specialties
Municipal regulations cannot cover matters relating to administrative procedures and instructional documents.
Municipalities cannot consider issues relating to the interior of buildings or specialist matters. These are sent for mere information and archiving purposes only, accompanied by statements issued by competent technicians stating that the projects were carried out in accordance with the law. Connections to electricity, water, telecommunications, sewage and gas networks may be made by hiring a certified company.
The mandatory existence of a project prepared by a designer for the purpose of executing electrical installations below 41.4 kVa is eliminated (until now the limit from which it was mandatory to prepare a project by a designer was 10.35 kVa.
Exclusion of the need for an opinion from an entity competent in matters of cultural heritage in the following situations:
In the case of alteration works inside real estate, without archaeological impact or without impact on relevant architectural elements and their integrated heritage.
When conservation works on the exterior of real estate properties are involved without altering architectural elements.
Regarding the installation of advertising signs, signage, awnings, terraces and street furniture.
When it comes to a licensing request for a property classified as being of national interest or public interest and an opinion is requested from the Directorate-General for Cultural Heritage, municipal councils are prohibited from requesting new opinions in matters of cultural heritage, including their internal services.
Revocation of certain requirements of the General Regulation for Urban Buildings (RGEU) and during construction
The mandatory existence of bidets in bathrooms ceases.
It provides for the possibility of having a shower in the bathroom, instead of a bathtub.
Allows greater flexibility in the use of kitchen solutions such as kitchenettes or walk through kitchens.
Mandatory police presence only in urban planning operations that require the closure of public roads.
Elimination of the requirement for unnecessary instructional elements, namely:
Forms of authentication, recognition or certification of signatures on any document;
Copies of documents held by the Chamber, such as transaction titles, records;
Building register;
Copies of permanent certificates, in this case simply indicating the number of the permanent certificate;
Security plan, which may, in any case, be subject to inspection, when applicable;
Security report;
Digitized work book;
Estimate of work costs.
Simplification of procedures in the use and transaction of properties
Elimination of authorization to use properties
Authorization for use has been eliminated when there has been a work subject to prior control, replacing this authorization with a mere prior communication (i.e., the mere delivery of documents).
In the case of a change of use, without work subject to prior control, a prior communication must be presented with a period of five days for the municipality to respond, considering the request for authorization of use to be accepted if the municipality does not respond.
All legal and regulatory references to the use license permit must be understood as being made for receipt of payment of legally owed fees.
Simplification of formalities in the purchase and sale of properties, by eliminating the need to display or prove:
existence of the housing technical sheet;
authorization of use or demonstration of its non-enforceability.
When creating public deeds involving the transfer of ownership of urban properties, the notary must inform that the property may not have the necessary urban titles for use or construction.
Simplification of processes in terms of territorial planning
Simplification of the rustic land reclassification process, with municipalities now able to determine the reclassification of rustic land into urban land, when cumulatively:
is intended for the installation of activities of an industrial, storage or logistics nature and the respective support services or for the construction of housing at controlled costs;
do not locate in sensitive areas, National Ecological Reserve or National Agricultural Reserve.
The proposal for the reclassification of rustic soil is prepared by the City Council, which simultaneously promotes:
a single public consultation of the draft deliberation, lasting at least 10 days;
a procedural conference in which all public bodies, services and legal entities express their position, which is recorded in the minutes, with the issuance of any written opinion being expressly prohibited.
The process is not suspended during the public consultation period
The reclassification of rustic land to urban land, whenever (i) the intended purpose is housing, (ii) the land ownership is exclusively public and (iii) they are located adjacent to urban land – is carried out through the amendment procedure simplified.
Conversion and construction of properties for housing use
The compatibility of the conversion of properties for residential use and the construction of new buildings for housing in urban areas that are classified in the applicable municipal plan as spaces for equipment, commerce and services is carried out through the simplified regime.
The municipality may object on a well-founded basis, within 20 days, from the date of communication of the intention to promote housing use. This opposition will have to invoke reasons of public interest, namely:
Noise;
Parking;
Existing mobility systems;
Green spaces, public and leisure facilities.
In the absence of opposition, compatibility of housing use is presumed, with the plan's rules relating to adjoining parcels and with which the parcel in question is capable of forming a harmonious unit applicable, with due adaptations.
To conclude this article, I must remember what was written at the beginning of it: the Bills approved by Parliament were analyzed by the President of the Republic, who promulgated Bill 77/XV/1 and vetoed the Bill 71/XV/1. As the latter has the most impact, it is with some expectation that the Parliament will accept (or not) the reservations expressed by the President of the Republic.
Need additional clarification? Do not hesitate to contact me:
Marco Moura Marques
+351 967 035 966
marcomouramarques@kwportugal.pt
Sources: Idealista, Público, Antas da Cunha ECIJA and Cuatrecasas
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