Consensus between the government and PSD, on tax breaks for long-term rentals, is emerging

Parliament has waved through on its first reading of a proposal from the governing Socialist Party (PS) to amend a bill from the centre-right Social Democrats to reduce the tax on landlords’ income from rent, based on the length of the rental contract.

In the vote on the legislative package on rentals, which is taking place in the parliamentary working group on housing, PS’ amendment to PSD’s bill that had prompted the socialists to withdraw its own initial bill, was approved with the votes against of the Communist Party and Left Block, both parties that form part of the PS government’s base in parliament. The two right-of-centre parties abstained in the vote.

PS’ proposal foresees a reduction in the rate of income tax (IRS) for medium and long-term rental contracts, for contracts signed from next year, as proposed by the PSD, but adds that this would apply “also to renewals of contracts that are in place. ”

PSD’s bill foresees the current rate of IRS, of 28%, being reduced for contracts of at least two years in length, by two percentage points, to 26%, with a further two points taken off for each renewal. For five-year contracts the reduction is five percentage points, to 23%, against renewable.

In both cases, the minimum rate of 14% may ultimately be reached; this also automatically applies to ten-year contracts.

Agreeing with PSD’s proposals, PS suggested that the minimum rate is 10%, to be applied to rental contracts of 20 years or more, an initiative that was approved by deputies.

The passage of the PSD bill means that the government’s bill, which proposed an addition to the tax benefits statute to create an incentive for long-term rentals, is in danger.

LUSA