Accordingly, an exemption from Municipal Property Transfer Tax (IMT) and Stamp Duty (IS) has been established for the acquisition of a primary residence by individuals aged up to 35.
Moreover, taking into account that banking institutions are subject to a maximum limit concerning the loan-to-value ratio (i.e., the ratio between the amount of the loan and the value of the property provided as collateral), the law also provides for the possibility of the State offering a personal guarantee to support the granting of housing loans to young people for the purchase of their first primary residence.
The IMT and IS exemptions apply to the first acquisition of a primary residence by individuals aged up to 35 at the date of the deed of sale and purchase, provided that, in the year of acquisition, they are not considered dependents for personal income tax (IRS) purposes. Individuals who already hold ownership rights or partial interests in residential urban property at the time of transfer, or at any time within the three years prior, are excluded from these exemptions.
The benefits granted under this regime will also cease to apply if, within six years from the date of acquisition, the property is used for a purpose other than that which justified the benefit — except in cases of sale, changes in household composition, or relocation of the place of work to a distance exceeding 100 km from the property.
The IMT exemption applies to properties with a value of up to €316,772. For properties valued above this threshold, IMT is only calculated on the excess amount, based on the rates set forth in the IMT Code.
In addition to the tax exemptions, the current regime also allows the State to provide a personal guarantee to credit institutions, to facilitate access to financing for the acquisition of a first primary residence by individuals aged up to 35. The personal guarantee may be granted to credit institutions where all of the following conditions are met:
- The borrower is aged between 18 and 35
- Has tax residence in Portugal
- Has income not exceeding the 8th bracket of the personal income tax scale
- Does not own any residential urban property or fraction thereof
- Has never previously benefited from a State personal guarantee
- The purchase price does not exceed € 450,000
- The amount of the State’s personal guarantee does not exceed 15% of the transaction value of the urban property or autonomous unit
- The State guarantee is intended to enable the credit institution to finance the full purchase price of the urban property or autonomous unit.
Additionally, an exemption from fees is granted for the registration of the first acquisition of a primary residence, as well as for the registration of a voluntary mortgage securing the loan granted, provided the property value does not exceed €316,772.
These measures may be applied cumulatively; however, depending on the specific circumstances, only one of them may apply — as there may be situations eligible for the State guarantee that are not eligible for IMT or Stamp Duty exemptions.
Read Dr Eduardo Serra Jorge’s last month’s article: Family reunification in the amendments to the Immigration Law
