PORTUGAL TRENDS AND DEVELOPMENTS Contributed by: Francisco Lino Dias, Ricardo Reigada Pereira, Sofia Nogueira Leite and Tamara Martins da Fonseca, PLMJ
for the registration of the first purchase and mortgage in these cases were also approved under Decree-Law 48-D/2024 of 31 July. Further measures were approved enabling young people from ages 18 to 35 to benefit, provided certain conditions are met, from 100% financing for the purchase of their first home, a significant improvement from the general sys - tem where only up to 90% of the property value is financed. This is made possible through the State’s personal guarantee to credit institutions, which covers up to 15% of the transaction value. This guarantee allows the credit institutions to finance the full transaction price (for acquisitions of up to EUR450,000), eliminating the need for young buyers to cover the remaining 10% with their own funds. Reclassification of rural properties (Lei dos Solos) Also with the aim of addressing growing demand for affordable housing, especially for the middle class, the Portuguese Government enacted a law to increase availability of land for construc - tion (Decree-Law 117/2024 of 30 December, which came into effect (mostly) on 29 January 2025). A special regime was created allowing the reclassification of rural land as urban land (where construction is possible), primarily for public housing, public rental and affordable hous - ing purposes. This law has been the subject of public and political scrutiny by the Portuguese Parliament, and several amendments had been approved by the end of February 2025. One of the changes relates to the procedure for approval of such reclassification, which has become less burdensome. The reclassification is, in any event, subject to several conditions,
such as (i) dedicating at least 70% of the con - struction area to public or affordable housing, avoiding property speculation, (ii) ensuring the new development aligns with existing urban are - as, (iii) avoiding sensitive or protected areas, (iv) guaranteeing necessary infrastructure and green spaces, (v) demonstrating the financial viability of the project and (vi) ensuring compatibility with local housing strategies. Personal income tax Amendments were made to the Personal Income Tax Law to delete tax obstacles to geographical mobility. Capital gains For an individual to benefit from the exemption from capital gains tax with the sale of a prop - erty, the relevant transferred property must have been used as the taxpayer’s own permanent residence prior to the date of its transfer for a minimum period of 12 months (instead of the previous minimum period of 24 months). Such minimum period could be further reduced in the event of certain exceptional circumstances, in particular, changes in the composition of the household due to marriage or de facto union, or the dissolution of the marriage or union, or an increase in the number of dependants. Furthermore, to benefit from this exemption, there is no longer a need for the taxpayer to not have benefited from the exemption from capital gains tax regime in the year in which the gains were realised and in the three preceding years. Rent costs For personal income tax purposes, the law has been amended to allow taxpayers to deduct the rents paid for their own permanent resi - dence from their gross property income earned through a residential lease agreement, provided
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