Law No. 18,795 is a program to promote and provide middle-income, lower-middle and lower-income families with better access to so-called social housing (the abbreviation of which is VIS) with the aim of facilitating the purchase or the lease through different tax exemptions to private investors, who build, expand, recycle properties, or buy projects that are under the protection of this law.
These facilities are tools that help sustain the construction projects of new homes, as well as the best access of the interested public to the advantages offered by this regulation (improvements in the supply and demand market). The social interest houses are located in relevant points of the localities, contributing in this way to the access to a better infrastructure of properties already installed.
The law also aims for greater social interaction, an improvement in the financing scenario and guarantees for the best acquisition of housing. Implicitly, the improvement of the technological innovations used for building constructions is impelled.
The exemptions include:
a) To the taxes assigned to the rent, produced in the activities or projects declared promoted. The exemption may include the rent itself or the tax itself.
b) Entire discount for the purposes of determining the income taxed by the Income Tax of the Economic Activities, the cost of obtaining the properties in which the properties in those activities or projects are built, restored, extended or recycled declared promoted. This cost can only be reduced as necessary to obtain and keep the income included in the activities and projects promoted, which would not have been exempted by virtue of the provisions of the preceding paragraph.
c) Exemption from the Property Tax (IP) of those properties in which its construction, restoration, expansion or recycling, has been declared promoted. Such assets will be taken as taxable assets for the purpose of calculating liabilities.
d) The cessation of the Value Added Tax (VAT) to those revenues that have been derived from the sale, construction, restoration, extension and recycling of the homes. The Executive Power will have the power to grant the credit for the tax included in the acquisitions of goods and services, destined to integrate the cost of such operations. In the same way, the tax corresponding to the acquisitions made by the social funds and the housing cooperatives, for their construction activity.
e) Exemption from Property Transfer Tax (ITP) to the transferring party, to the acquiring party or to both parties, in the case of events generated linked to the first transfer of assets reserved to the home whose acquisition, construction, restoration, expansion or recycling would have been declared promoted.
f) Elimination of the adjudicated VAT for the guarantee services related to the lease and acquisition of real estate for the purpose of housing of social interest framed by law.
g) Cessation of the Equity Tax applicable to the assets affected to the rendering of guarantee services, referred to in the previous numbering. These assets will be considered as taxed for the calculation of liabilities.
Know the different options in projects built under this regime click here
Source of information used for exemptions: Law No. 18,795, D.O. 12 set / 011 – No 28305, with link: click here