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Luxury homes evade taxes – Economy

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Luxury homes evade taxes – Economy

Urban rehabilitation aims to restore blighted properties through tax bonuses.

It is a “Chinese business” in luxury real estate. Hundreds of properties in historical centers are sold with exemption from paying IMI and IMT.

Moreover, whoever rehabilitates and sells it is not only exempt from IMT, but the capital gain he makes from such sale is taxed at a reduced rate of 5%.
Let’s look at a concrete example.

In the heart of Lisbon, in Chiado, we have Sandomel Palace. An 18th century building that survived the Lisbon earthquake almost unscathed. Dating back to the 17th century, it retains many of its original features as well as the vaulted ceilings painted by the Portuguese painter Pedro Alexandrino de Carvalho.

It has been rehabilitated and has a T2+1 apartment with an amazing view of the Tagus River and Cristo Rey of 157 m2 and a private parking space.

With a spacious master suite, a kitchen equipped with SMEG appliances and air conditioning in all rooms, it was sold for 1.3 million euros without paying a cent of IMT (about 97 thousand euros should have been paid in tax) and with a three-year exemption from paying IMI (Article 45 of the Benefits Code tax).

Why is this happening? It is a rehabilitated property within an urban rehabilitation area. For this reason alone, you can benefit from a range of tax benefits that are not limited to municipal property tax (IMI) or transaction tax (IMT), but also extend to capital gains obtained from the business.

Just look at Article 71, No. 5 of the EBF Law, which states that “Capital gains received by IRS taxpayers residing in the Portuguese territory arising from the first sale, after the intervention, of property located in the Urban Rehabilitation Area are subject to tax.” In the amount of autonomy rate of 5%.”

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We have luxury homes in prime areas of major cities that are selling with real tax bonuses.

More housing will end the tax bonuses offered by the IRS
The More Housing Law, approved on Friday by the Socialist majority without any changes, ends part of the tax benefits granted to urban rehabilitation.

The Department of Marina Gonsalves will end the reduced 5% IRS rate applied to capital gains and real estate income earned from the sale and rental of real estate after urban rehabilitation operations.

It is a “Chinese business” in luxury real estate. Hundreds of properties in historical centers are sold with exemption from paying IMI and IMT.

Moreover, whoever rehabilitates and sells it is not only exempt from IMT, but the capital gains he makes from such sale are taxed at a reduced rate of 5%. Let’s look at a concrete example.


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