Tax Benefits – Rehabilitation

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Tax Benefits – Rehabilitation

As an additional means of stimulating urban renewal operations, encouraging individuals to a more active role in the process and the establishment of partnerships with public authorities, the Government considered it appropriate to devote a number of tax benefits.

In this sense, amendments were made to the Tax Benefits which provide a set of incentives for urban rehabilitation (art. 71º).

Such incentives have:

As a general context
  • Buildings leased with old rents which are subject to recovery work
  • Urban property located in ARU (areas of urban rehabilitation) which are subject to recovery work
As temporal context
  • Work started after January 2008 and completed by December 2020
  • Urban property located in ARU (areas of urban rehabilitation) which are subject to recovery work
What are the tax benefits?
  • IRS - tax deduction of 30% of the costs incurred by the owner related to rehabilitation, up to € 500
  • MORE CAPITAL GAINS - tax at a reduced rate of 5% when they are fully rehabilitated arising from real estate sales in ARU
  • INCOME BUILDING - tax at a reduced rate 5% after completion of rehabilitation works
  • IMI – isenção por um período de 5 anos, o qual pode ser prorrogado por mais 5 anos
  • IMT -. 1st exemption in property transmission rehabilitated in ARU, exclusively for permanent residence
The creation of urban renewal areas (ARU) is provided for in Decree-Law No. 307/2009 of 23 October .

At the same time has also created a set of benefits to real estate investment funds in urban regeneration:

  • IRC exemption, provided that at least 75% of their assets subject to estate recovery measures in ARU
  • Taxation of units at the special rate of 10% on IRS and IRC, as foreseen.

See Article 71 of the Tax Benefits.

The entry into force of Law No. 32/2012, of 14 August, is without prejudice to the Extraordinary Regime for the Support of Urban Rehabilitation, approved by Law No. 67-A/2007 of December 31, or Article 71 of the Tax Benefits.