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Rental Law: The tax benefits that owners and tenants must take into account when signing a contract - Infobae
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www.infobae.com
October 24, 2023
One by one, what are the tax incentives in force in the regulations that were modified. How to take advantage of these advantages
By José Luis Cieri
With the modifications to the Rental Law, tax benefits were added. They will be vital for the real estate supply to grow again, for now the future is uncertain (Photo: Getty)
With the recent reform, the Rental Law underwent significant changes. Last Tuesday, the Government gave the green light to these modifications and the new agreements now include semiannual updates using the Casa Propia coefficient, instead of the Lease Contract Index (ICL) regulated by the Central Bank that was previously applied annually.
Tax benefits were also added for owners and tenants : What are these benefits and what is their correct application procedure?
The purpose of the properties will be the location as a “residential home”, for a minimum period of three years (there were no changes). The exceptions are the headquarters of embassies, consulates or international organizations, storage spaces, market stalls or fairs; nor will it apply to temporary rentals for tourist purposes with a maximum period of 3 months.
Humberto Bertazza , tax consultant partner of Estudio Bertazza, Nicolini, Corti y Asociados, listed these benefits to Infobae . “One is the Income Tax. Tenants can deduct 40% of the amounts paid for rent, with a limit equal to the non-taxable profit, as long as they are not owners of any property . The annual deduction of non-taxable income (GNI) is $451,683, which is equivalent to a monthly limit of 37,640 pesos. This means that, for example, on a monthly rent of $100,000, 40% could be deducted, that is, $40,000, which would total $480,000 per year. However, since the limit is $451,683, the deduction cannot exceed that amount,” he said.
This deduction is already in effect in the income tax. Now, a new 10% deduction is introduced for both the landlord and the tenant, without any limit.
A woman holds a rental contract, reflecting concerns about real estate and contracts (Illustrative image Infobae)
“Following the previous example, the tenant may also deduct 10% of the total rent ($100,000 x 12 = $1,200,000), or $120,000. The owner may deduct the same amount,” added Bertazza.
This is a new exemption since currently only the residential home was exempt up to $30,000,000; “Obviously, the benefit applies exclusively to the landlord,” Bertazza clarified.
Bertazza clarified: “To be a monotributist, you cannot carry out more than three simultaneous activities or not own more than three operating units. This would be the case of a lawyer who practices his profession liberally and rents three properties he owns.
The legal modification considers each property as an operating unit.
From the Lisicki, Litvin y Asoc. study, they explain to Infobae that before the reform, the monotax excluded those who had more than 3 simultaneous activities or joint operating units. With the new law and duly registered contracts, a single operating unit is considered regardless of the number of properties. There is no longer a limit of 3 departments to register in the simplified regime.
As of the date of this publication, the control body has not clarified whether the exemption will apply to the entire monotax quota, especially in the provinces where it is made up of the provincial component called unified monotax.
“The situation of taxpayers who own up to 2 properties also remains to be defined and whether it will be applied retroactively from January 2023, in addition to the way in which the balance will be returned,” Beade said.
Properties intended for residential housing, with duly registered contracts (in the AFIP Property Location Registry), are exempt from paying Personal Property taxes when the value of each property is equal to or less than the amount established in the second paragraph of the Article 24 of the BP Law. “For 2022: $11,282,141.08 and for 2023 the interannual variation of the CPI as of October 2023 will be taken. Minimum, the amount will double),” explained Enzo Celleri from the Lisicki, Litvin y Asoc study.
Owners who pay taxes on bank credits and debits (ICDB) will not be taxed . This applies to credits and debits in bank accounts used exclusively for operations related to the rental of residential properties and duly registered contracts.
Celleri who clarified that “both owners who rent their properties to live in and taxpayer tenants registered in profits may deduct 10% of the annual rent paid from their taxable activity.”
For owners , this deduction will apply only to income in the first category, and will be based on 10% of the total invoiced during the year in properties intended for residential purposes.
After renting the home, there are a series of tax requirements that can benefit owners and tenants after signing the contract (Photo: Getty)
Tenants , for their part, will be able to continue deducting up to 40% of the tax , as long as they do not own any property. It is important to mention that, while information on property ownership can already be reported in the AFIP's SIRADIG application, the new deduction is not yet in force.
The law also urges the provinces and CABA to grant other tax benefits related to the location of properties intended for housing.
“As for CABA, it is relevant to remember that, since May 2023, there is an exemption on gross income for owners with up to 3 properties, as long as the value of each one does not exceed $220,000. It should be taken into account that this exemption does not apply to commercial contracts or those for tourist purposes, which will continue to be taxed by the aforementioned tax,” Beade said.
The fines for termination of the contract are established according to the rental value at the time of delivery of the property. Thus, it is recommended to notify any rental decision in advance and comply with the deadlines stipulated by regulations. After 6 months of starting the contract and notifying the landlord one month in advance, no penalty is applied. If notice is given with a notice of 3 months or more, and this notice is given after 6 months, payment of compensation is also not required.
Celleri concluded that if the contract is terminated after the first 6 months but before one year of validity, “the penalty is equivalent to one and a half months of the rent at the time of vacating the property. If termination occurs after the first year, the penalty is reduced to one month's rent upon return of the property.”
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Source:
Ley de Alquileres: los beneficios impositivos que propietarios e inquilinos deben tener en cuenta a la hora de firmar un contrato
Uno por uno, cuáles son los incentivos tributarios vigentes en la normativa que se modificó. Cómo aprovechar estas ventajas
www.infobae.com
October 24, 2023
One by one, what are the tax incentives in force in the regulations that were modified. How to take advantage of these advantages
By José Luis Cieri
With the modifications to the Rental Law, tax benefits were added. They will be vital for the real estate supply to grow again, for now the future is uncertain (Photo: Getty)
With the recent reform, the Rental Law underwent significant changes. Last Tuesday, the Government gave the green light to these modifications and the new agreements now include semiannual updates using the Casa Propia coefficient, instead of the Lease Contract Index (ICL) regulated by the Central Bank that was previously applied annually.
Tax benefits were also added for owners and tenants : What are these benefits and what is their correct application procedure?
The purpose of the properties will be the location as a “residential home”, for a minimum period of three years (there were no changes). The exceptions are the headquarters of embassies, consulates or international organizations, storage spaces, market stalls or fairs; nor will it apply to temporary rentals for tourist purposes with a maximum period of 3 months.
The Civil and Commercial Code establishes tax incentives that require that real estate lease contracts, both urban and rural, be registered.
Humberto Bertazza , tax consultant partner of Estudio Bertazza, Nicolini, Corti y Asociados, listed these benefits to Infobae . “One is the Income Tax. Tenants can deduct 40% of the amounts paid for rent, with a limit equal to the non-taxable profit, as long as they are not owners of any property . The annual deduction of non-taxable income (GNI) is $451,683, which is equivalent to a monthly limit of 37,640 pesos. This means that, for example, on a monthly rent of $100,000, 40% could be deducted, that is, $40,000, which would total $480,000 per year. However, since the limit is $451,683, the deduction cannot exceed that amount,” he said.
This deduction is already in effect in the income tax. Now, a new 10% deduction is introduced for both the landlord and the tenant, without any limit.
A woman holds a rental contract, reflecting concerns about real estate and contracts (Illustrative image Infobae)
“Following the previous example, the tenant may also deduct 10% of the total rent ($100,000 x 12 = $1,200,000), or $120,000. The owner may deduct the same amount,” added Bertazza.
Personal property tax
The exemption is incorporated into the tax for properties intended for residential purposes with duly registered contracts, to the extent that they have a tax value equal to or less than $30,000,000, each.This is a new exemption since currently only the residential home was exempt up to $30,000,000; “Obviously, the benefit applies exclusively to the landlord,” Bertazza clarified.
For owners
Tax experts indicate that, although regulations are required for precise details, the implementation of these benefits could motivate owners to rent their properties for residential use, from a tax point of view.Bertazza clarified: “To be a monotributist, you cannot carry out more than three simultaneous activities or not own more than three operating units. This would be the case of a lawyer who practices his profession liberally and rents three properties he owns.
The legal modification considers each property as an operating unit.
From the Lisicki, Litvin y Asoc. study, they explain to Infobae that before the reform, the monotax excluded those who had more than 3 simultaneous activities or joint operating units. With the new law and duly registered contracts, a single operating unit is considered regardless of the number of properties. There is no longer a limit of 3 departments to register in the simplified regime.
And they provided an example: “If an accountant invoices for his profession and also does so for the rental of properties, the income from the locations of up to two properties will be exempt from paying the Monotributo. Surely you have to be registered and make the respective C invoices, but the monthly fee will not be paid.”
As of the date of this publication, the control body has not clarified whether the exemption will apply to the entire monotax quota, especially in the provinces where it is made up of the provincial component called unified monotax.
“The situation of taxpayers who own up to 2 properties also remains to be defined and whether it will be applied retroactively from January 2023, in addition to the way in which the balance will be returned,” Beade said.
Personal Property Tax
The regulations also cover the owner who pays the Personal Property Tax (BP)Properties intended for residential housing, with duly registered contracts (in the AFIP Property Location Registry), are exempt from paying Personal Property taxes when the value of each property is equal to or less than the amount established in the second paragraph of the Article 24 of the BP Law. “For 2022: $11,282,141.08 and for 2023 the interannual variation of the CPI as of October 2023 will be taken. Minimum, the amount will double),” explained Enzo Celleri from the Lisicki, Litvin y Asoc study.
Owners who pay taxes on bank credits and debits (ICDB) will not be taxed . This applies to credits and debits in bank accounts used exclusively for operations related to the rental of residential properties and duly registered contracts.
Celleri who clarified that “both owners who rent their properties to live in and taxpayer tenants registered in profits may deduct 10% of the annual rent paid from their taxable activity.”
Other aspects
Regarding Income Tax, the new law establishes a deduction of 10% of the annual rent for both the owner and the tenant . This, being an annual tax, implies that the sworn returns corresponding to the period 2023 will be presented in 2024.For owners , this deduction will apply only to income in the first category, and will be based on 10% of the total invoiced during the year in properties intended for residential purposes.
After renting the home, there are a series of tax requirements that can benefit owners and tenants after signing the contract (Photo: Getty)
Tenants , for their part, will be able to continue deducting up to 40% of the tax , as long as they do not own any property. It is important to mention that, while information on property ownership can already be reported in the AFIP's SIRADIG application, the new deduction is not yet in force.
The law also urges the provinces and CABA to grant other tax benefits related to the location of properties intended for housing.
“As for CABA, it is relevant to remember that, since May 2023, there is an exemption on gross income for owners with up to 3 properties, as long as the value of each one does not exceed $220,000. It should be taken into account that this exemption does not apply to commercial contracts or those for tourist purposes, which will continue to be taxed by the aforementioned tax,” Beade said.
Tips
Specialists recommend that taxpayers be attentive to new developments that arise as well as obtain good advice on the requirements posed by the respective regulations. For tenants, before signing a contract, it is essential to ensure that the contract can be registered with the AFIP to access legal benefits.The fines for termination of the contract are established according to the rental value at the time of delivery of the property. Thus, it is recommended to notify any rental decision in advance and comply with the deadlines stipulated by regulations. After 6 months of starting the contract and notifying the landlord one month in advance, no penalty is applied. If notice is given with a notice of 3 months or more, and this notice is given after 6 months, payment of compensation is also not required.
Celleri concluded that if the contract is terminated after the first 6 months but before one year of validity, “the penalty is equivalent to one and a half months of the rent at the time of vacating the property. If termination occurs after the first year, the penalty is reduced to one month's rent upon return of the property.”
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