The Investment Contracts for Rentals Regime emerges as a response to the need to increase the availability of houses for rent in the country. The government's proposal foresees that those who build, renovate, or buy properties intended for residential rental can access tax benefits for a maximum of 25 years. These contracts, called CIA, would be signed between investors and the IHRU (National Housing Institute), acting on behalf of the State. Although the proposal has already been submitted to Parliament, its approval still depends on a vote in the Assembly of the Republic.

The CIA regime applies only to properties intended for rental with rents limited to €2,300 per month. To be eligible, projects must guarantee that 70% of the built area is reserved for residential rental. Furthermore, each covered property must remain on the market for at least eight months for each year of the CIA contract's validity.

Among the incentives provided are exemption from IMT (Property Transfer Tax) and Stamp Duty on the purchase of land or buildings intended for rental, exemption from IMI (Municipal Property Tax) for up to eight years and a reduction in the rate in subsequent years, reduced VAT on construction works, and exemption from the additional IMI. Partial reimbursement of ICMS (State Sales Tax) paid on technical services, such as architecture or project studies, is also included, in addition to reductions in IOF (Tax on Financial Operations) applicable to collective investment undertakings.

What else is there to know about the new CIA regime?

Investments are only accepted when at least 70% of the constructed area is intended for residential rental, with the remainder being applicable to uses compatible with the residential function. The maximum rental limit, set at R$ 2,300 per month, is mandatory for all included contracts.

To access a CIA (Credit Acquisition Agreement), investors must meet several requirements: have technical and managerial capacity, maintain organized accounting, ensure that taxable profit is not determined by indirect methods, and have a regularized tax and social security situation. These conditions aim to reinforce the security, stability, and credibility of investments.
Obligations of investors under CIA contracts
Investors who are part of the regime are subject to specific duties. They must identify all properties covered by the CIA, ensure that they do not sell the buildings or associated fractions, except when the transfer occurs simultaneously with the contractual position, and provide the competent authorities with all the necessary documentation for monitoring the investment.

They must also report any fact that jeopardizes the approved assumptions, comply with all tax and social security obligations, and ensure compliance with the deadlines and conditions stipulated. These rules seek to ensure that tax benefits translate into a real increase in the supply of rental housing and greater stability in the housing market.

Source: Editorial Staff
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