From IRS to IMT exemption and guarantees for purchasing a home. Everything that changes for young people up to the age of 35

Public guarantee for credit for houses up to 450 thousand euros
Young people aged between 18 and 35 who want to buy a house, but are unable to obtain financing, will count on help from the Government. To facilitate access to bank credit, the Government provides a maximum public guarantee of 15% of the transaction value, for houses worth up to 450 thousand euros.

What happens nowadays is that, often, when borrowers with precarious working conditions are involved, as happens with the so-called green receipts, or situations in which the effort rate (weight of all credit installments in relation to income ) is close to the legal limits [Banco de Portugal recommends that credit not be given to anyone with an effort rate greater than 50%], banks can ask for guarantees or guarantors to reduce the credit risk of the operation. Other times, these customers are not even able to get the green light for financing.

With the approval of this guarantee, the State assumes itself as a type of guarantor in the housing credit contract, by providing this guarantee, which cannot exceed 15% of the purchase value, which also has a limit: 450 thousand euros . In other words, the maximum guarantee is 67,500 euros. The Bank of Portugal's macroprudential recommendation for credit also advises banks to finance up to 90% of the value of the loan for the purchase of a house.

This guarantee given by the State is available to young people up to the 8th grade, with gross annual income of up to 81,199 euros. In other words, anyone who earns more than 5,800 euros per month (last step) is left out of this – and other – measures.

The measure is available for the purchase of a first home for the purpose of own and permanent housing and for those who do not have other properties in their name, nor have they taken advantage of the State guarantee. Imagine someone who inherited a family home, even if it is outside the place where they live, will no longer be able to benefit from this support, which should come into force on August 1st.

Exemption from IMT and IS allows you to save up to 14,686 euros
Also scheduled to come into force on August 1st this year is another measure aimed at young people who want to buy their first home. The Executive led by Luís Montenegro approved the exemption from paying municipal tax on costly property transfers (IMT) and stamp duty, for properties up to 316 thousand euros, a measure that aims to relieve young people of what they call a “second entry ” when they buy their first home.

All property transactions must pay these two taxes, which vary depending on the value of the property. Houses priced between 101,917 and 139,412 pay an IMT fee of 2% of the transaction value; properties between 139,412 and 190,086 euros have a rate of 5%; and above 190 thousand euros up to 316,772 euros, the maximum amount defined by the Government to benefit from this measure, they pay a tax of 7%.

In addition to this charge, buyers also have to pay stamp duty to the State, which corresponds to 0.8% of the value of the property.

For a purchase within the limit defined by the Government (316,272 euros), a young person can save a maximum of 14,686 euros (12,152 euros from IMT and 2,534 euros from IS).

The measure also provides that in cases where the purchase price of the house varies between 316,272 euros and 633,453 euros, young people up to the age of 35 can benefit from the maximum exemption in the previous bracket. In other words, they have the maximum expected benefit for a house of 316,272 euros: 14,686 euros.

Young people up to the age of 35 will still not have to pay fees for houses with an asset value of up to 316 thousand euros.

There are no income bracket limits for this measure. The limits are set depending on the value of the house.

Door 65 without income limits
Young people who want to use the rental support program, Porta 65, will have easier access rules. On the one hand, there is no longer a maximum ceiling on the amount of income. On the other hand, the application for support can be made without a lease contract, or promise of a contract.

As explained by the Minister of Youth and Modernization, Margarida Balseiro Lopes, there is a reversal in the application process. First, the young person applies for the program, to find out the amount of support they will receive, and only then goes looking for a house. “You have two months to do this”, detailed the government official, adding that the Government’s concern was “adapting the rules of the Porta 65 program to the reality of young Portuguese”, which led the Executive to decide “to eliminate the maximum income as a factor of exclusion” to access this support.

Unlike what happens today, where young people are only entitled to Porta 65 after collecting six salary receipts, after the entry into force of this measure, scheduled for September 1, 2024, only three salary receipts will be required at the time of candidacy.

The program is reinforced by 26 million euros and aims to reach 40 thousand young people.

IRS rates between 4.4% and 15%
Young people up to 35 years old and with a gross monthly salary of less than 5,800 euros will pay less taxes, starting from January 1, 2025. As proposed in its Government program, the Executive approved the so-called IRS Jovem. A package of measures that provides for a reduction in the IRS rate to be applied to income from dependent and independent work by two thirds to a maximum of 15%.

All young people up to the age of 35, who work as employees or on a payroll, up to the 8th bracket, will have new IRS rates, which will vary between 4.4% and 15%. The last step is left out, with gross annual income of 81,199 euros, or 5,800 euros per month, considering 14 months of income.

“The vast majority of young people will have a tax rate between 4.4% and 7% or 8%”, explained Prime Minister Luís Montenegro.

As an example, a young person who earns a gross salary of 1,000 euros will save 941 euros per year. For a gross income of 1,500 euros, the annual savings are almost 2,000 euros, said the Minister of Youth.

For those who start with a lower salary, at the age of 21 and a monthly income of 820 euros, assuming that the salary is updated annually taking into account the inflation rate and the real evolution of salaries (The Government assumes increases of 2 % and 2.5%, respectively), the average annual savings until the young person reaches 35 years of age is 980.98 euros.

Complement to accommodation extended to non-scholarship holders
Another of the housing support measures approved by the Council of Ministers concerns students who are outside their family's area of residence. Accommodation support payments for displaced students who are not scholarship recipients are extended. Thus, displaced students will be able to receive 50% of the accommodation supplement currently paid to scholarship students.

The measure is aimed at households whose per capita income is greater than 23 IAS and equal to or less than 28 IAS, that is, monthly income between 836 and 1,018 euros, as explained by the Minister of Youth and Modernization, Margarida Balseiro Lopes.

The State Budget for 2024 predicted an increase in the accommodation supplement of up to 120 euros, with young displaced scholarship recipients receiving a value between 264.24 and 456.41 euros per month, varying depending on the municipality to which they moved. Students who are eligible for this measure will receive half of this amount.

The Government predicts that the measure, which comes into force in September with the start of the new academic year, will reach 13,000 non-scholarship students.

The Executive led by Luís Montenegro also announced an increase in the supply of beds for students, using the installed capacity of Youth Hostels and INATEL. These protocols allow us to increase the number of beds available by 709 beds, which will be part of the Social Action Services offer.

Student workers earning up to 14 minimum wages maintain a scholarship
Young student workers will be able to access scholarships as long as they have an annual income of up to 14 times the national minimum wage.

Currently, an only child whose parents' income places them at the maximum eligibility threshold of 23 IAS per capita income, that is, around 1,255 euros earned on average by their parents, can only accumulate around 350 euros per month in salary as student worker.

With the change introduced by the Government, there is an exemption from the student worker's income for the purposes of calculating the household's per capita income, up to an annual limit of 14 minimum wages, while the remaining amount is included in the calculation.

Check-nutritionist and check-psychologist
The dentist check already existed, but now the Government has introduced two new concepts: the nutritionist check and the psychologist check. In practice, young people between the ages of 12 and 30 will have access to a reinforced network of psychologists, nutritionists and nurses from the IPDJ's Cuida-te + program.

University students will also have access to psychology consultations through the award of a psychologist voucher, in a package of 100 thousand consultations, which will be available from September. These checks will be distributed by Higher Education Institutions.

In addition to access to psychologists, the Government will also provide 50,000 consultations with nutritionists, through a nutritionist check.

Menstrual hygiene products will also be distributed free of charge in schools and health centers.

Source: ECO Sapo