Holiday lets that opt for permanent rentals “to be spared capital gains”

A sting in the tail of Alojamento Local (holiday lettings) legislation has been softened slightly in the government’s proposed State Budget for 2018.

Previously any homeowner who decided to pull out of the AL scheme discovered that it was not in fact that easy.

Signing up for AL involved one set of rules and regulations. Pulling out implies another.

As the country’s Alojamento Local association ALEP explained in June, homeowners leaving the regime find themselves liable for ‘capital gains tax’.

At the time, ALEP president Eduardo Miranda said “not many people know this”, suggesting those that do would not consider entering the holiday lettings market.

Thus the government’s latest idea is to offer capital gains exemption to anyone who leaves the AL regime in favour of permanent renting.

But, according to dinheirovivo website, this opens up another grey area.

Quoting lawyer António Gaspar Schwalbach, the website explains there is no way of proving whether houses are being rented or not, other than through rental contracts, and the respective income.

Thus, Schwalbach’s question: “What happens if a house is on the rental market and available but no-one wants to rent it?”

It’s just another stumbling block thrown up by AL legislation that has been criticised for not having been properly thought-through.

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