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Tax exemption measure for home purchases, effective August 1, leads young people to delay deed signings.

The measure approved by the Government that ensures exemption from the Municipal Tax on Onerous Property Transfers (IMT) and the Stamp Duty (IS) for young people up to 35 years old will come into effect on August 1, leading many to postpone deeds.

According to entities and professionals in the sector contacted by Lusa, as can be read in the Notícias ao Minuto, this is a trend that has been happening since the end of May, as soon as the measure was approved in the Council of Ministers.

The Chairman of the Order of Notaries, Jorge Batista da Silva, acknowledges that these delays have been intensifying and will continue until the tax benefit comes into effect.

Note that the measure grants exemption from these taxes on the purchase of the first own and permanent housing to young people up to 35 years of age, who are not dependents for IRS purposes. The exemption applies to houses valued up to the 4th IMT bracket, that is, up to 316,772 euros, and between this value and 633,453 euros IMT must be paid at the rate corresponding to this bracket (8%).

What, in practical terms, leads a young person to save, for example, 13,377.58 euros in taxes when buying a property for 300,000 euros (10,977.58 in IMT and 2,400 euros in Stamp Duty).

In most cases, sellers have accepted the postponement of deeds, as the purchase and sale promise contracts (CPCV) include a period of 90 days until the deeds are performed.

Therefore, "although it is expected that more young people will request to postpone the deed, the dean of the Order of Notaries advises caution in relation to what is contractualized in the CPCV, so that there are no breaches and a tax relief does not turn into a heavier bill," reads the news article.

Even though August is a vacation period, the head of the bar association mentioned that there will be no issues with scheduling a large number of deeds for this month, since they are used to adapting during peak demand periods.

This measure will cover a large part of the population that takes out home loans, considering that the annual report on the housing credit market by Idealista concluded that about 38% of the deeds for housing purchases registered in 2023 were made by young people up to the age of 35.

In addition, data from the Bank of Portugal (BdP) on the characterization of people who contracted housing credit in 2023 indicate that the age ranges 18-30 years and 31-40 years represent more than 50%.

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