In the case of transfers of properties that were used for local accommodation to rent, their identification in the IRS is used so that the respective owners can benefit from the IRS and IRC exemption scheme created by the Mais habitação program.
Taxpayers who have transferred properties from local accommodation to rental housing will have a field to identify these houses in the IRS tax return models for 2024, published in the Diário da República this Friday, and will benefit from tax exemption.
This new field is included in annexes F (property income), B and C (for business income under the simplified regime and with organized accounting, respectively) and represents just one of the changes that the various forms in force in 2024 bring compared to those of previous years.
In the case of transfers of houses that were used for local accommodation to residential rental, their identification in the IRS allows the respective owners to benefit from the IRS and IRC exemption scheme created by the Mais habitação program, with the aim of stimulating the supply of houses on the residential rental market.
Under this scheme, rents resulting from the transfer to permanent rental housing of properties previously used as rental housing and which were used for this activity until December 31, 2022, pay zero IRS and IRC.
This income tax exemption covers income earned until the end of 2029, provided that the lease contract is signed by December 31, 2024.
The field in the IRS declaration now published is aimed at taxpayers who have made this transfer during 2023.
It should be noted that for those who do not qualify for this exemption from moving from rental housing to residential rental, they pay a special rate of 25% on rents, which may be lower if they opt for contracts of more than five years.
Another of the ‘novelties’ of the IRS forms that must be used this year (to declare income for 2023) is also in annex F and has to do with the field where landlords must indicate whether in 2023 they updated rents by more than 2% or whether this update was less than or equal to 2%.
It should be remembered that last year a 2% ceiling was imposed on rent rises as part of the package of measures aimed at families outlined by the government to mitigate the impact of rising inflation, and a mechanism was designed to compensate landlords.
In practical terms, this compensation consists of a portion of the rental income not being subject to taxation.
That ceiling, it should be remembered, applies to all rental contracts, except for the so-called old rents that have not been transferred to the NRAU or those that provide for other forms of updating than that resulting from the mechanism provided for in the law – which takes into account the average inflation without housing known in August.
The IRS tax return models also include something new in Annex G, which responds to the suspension, for two years (between January 1, 2020 and January 1, 2022), of the time limit for reinvesting capital gains on own permanent housing, provided for in the Mais Habitação law.
The rules in force allow 36 months after the sale for reinvestment to take place, determining that at the end of this period the capital gains generated will be taxed.
However, in view of the greater difficulties experienced during the pandemic in buying a new home for permanent residence, Mais Habitação has considered suspending the period for two years and has created ways for those who have already been taxed to recover the amount paid.
The annual IRS tax return begins on April 1st and ends on June 30th. Until then, taxpayers should go to the Tax Office Portal to update their household details or register and check their invoices.