Subject of the reform. What is it?
In order to stimulate trading and to revive the housing market the Notary has developed a number of proposals to introduce tax incentives for real estate conveyances.
There are five proposals, the substance of which may be summarised as follows.
- Provisions relating to the sale of buildings subject to VAT.This proposal is aimed at providing the individual buyer of buildings or portions of buildings ineligible for VAT exemption with a tax credit in proportion to the amount of the rate of value added tax. This is a proposal that, even for buildings subject to VAT, where it is common practice to hide the real price, would encourage the emergence of the real value of the property, with obvious benefits for the tax authorities.
- Changes to the consolidated text on income tax on rents regarding leasing by construction companies.This proposal provides for a system of taxation that is more favourable for lease contracts entered into by construction companies regarding unsold properties.Very often these contracts are entered into by the construction companies to fulfil at least the obligations under the loan agreement entered into for the construction; however, the existing system of taxation of rents received does not even cover the cost of financing. For this reason, the notariat proposes to exclude from the taxable income of builders the rent received for unsold properties, up to the portion of the loan taken on by the tenant attributable to the tax period and until discharge of the loan used for the realisation of the construction.The tax break is subject to a number of requirements, including that the lessee use the housing unit as a principal residence.
- Changes relating to the taxation of preliminary contracts.With this proposal, the notariat fixes the maximum time limit for the proportional registration tax on preliminary contracts, when advances or deposits have been paid, as that provided for the final contract by virtue of the unitary concept of the economic transaction (preliminary, final). The proposal would supersede the current system which provides a mechanism for reimbursing the taxpayer in the event that the proportional tax paid for the registration of the preliminary contract is greater than that expected for thefinal contract.
- Exemption from indirect taxes and infrastructure costs for sale of exploitable public property.This proposal was developed by the Notariat to promote the policies of divestment of state assets aimed at reducing the public debt and making best use of real estate.Tax relief is in the form of exemption from stamp duty, mortgage and cadastral taxes and VAT, if due, for all contracts relating to property owned by the State or any other public entity.
- Amendments relating to the taxation of registrations and discharges of mortgages. In order to facilitate the resumption of trading in real estate, the notariat proposes to reduce the tax burden on legal mortgages, subjecting the relevant deeds to fixed mortgage taxes both for registration and for discharge.