Apart from income tax or corporate tax, as well as tax on defense, for a period of three years, will be the income of property owners who will rent at an affordable rent to other persons who will fall under the income criteria set out in the Plan of the Ministry of Interior "Renovate-Rent". At the same time, property owners will have the right to receive increased capital discounts of 20%.
Two related bills were tabled in Parliament on Thursday. The first bill, which amends the Income Tax Law, was submitted to the plenary of the Parliament and will soon be put under the microscope of the competent parliamentary committee for discussion.
According to the bill, tax breaks will be granted to property owners, legal entities or natural persons, so that they can rent their units at an affordable rent, for the benefit of a specific group of citizens, so that they become beneficial to citizens.
Affordable rent is defined as the rent that is 30% lower than the market rent. It is worth noting that the Ministry of Interior will publish a relevant list on its website and on the online platform affordable housing, per District, per Municipality or other specific area or per nearest Municipality or region and per type of housing unit.
In addition, owners will be given the right to claim increased capital discounts for buildings of 5% (instead of 3% currently in force) and 15% for machinery and equipment (instead of 10% currently in force) for capital expenditure.
The increased capital discounts can respectively be claimed by natural or legal persons, for purchases made for the years 2024 – 2027. The fiscal impact of income tax exemptions is estimated at €1.75 million. per year for the years 2024-2027 (total €5.25 million).
No special defence levy
A second bill was promoted in Parliament, amending the law on the Special Contribution for Defence. In particular, it provides for the exemption of an extraordinary defence levy of 3% on rental income granted at affordable rent. The exemption will be granted during the period that the "Renovate – Rent" Scheme of the Ministry of Interior will be implemented. The budgetary cost of this measure will be €100,000 per year, i.e. €300,000 during its three-year implementation.
The criteria
Citizens who will benefit from affordable rents will have to comply with the income criteria that fall under those set out in the Scheme of the Ministry of Interior entitled "Renovate – Rent", who are not connected persons to the landlord.
Specifically, the Gross Family Income should be within the following framework:
- Single person: up to €25.000
- Couple or single parent family of two: up to €45.000
- Family of 3 persons: up to €50.000
- Family of 4 people: up to €55.000
- Family of 5 or more people: up to €65.000
