Will AIMI influence our real estate investment decisions?

Journal Mundo Português published article by "Will AIMI influence our real estate investment decisions?" Fire Horse on 13/11/2020. Read the full article:

13 of November 2020.

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It is common to talk about investments these days. We have all heard, on the news, in a conversation with a friend at the café, during a break from a football game or in an economics class, of the most varied types of investment. As a general rule, it is almost immediate that we associate real estate investments, such as the acquisition of immovable property, as being safe investments to which it is possible to associate some stable fixed return. However, to what extent can taxation, taxes, interfere with these investment decisions?

A detailed analysis could be made on the impact of the most varied taxes to be applied to real estate investments. In this sense, we have chosen, in this space, to address the impact of AIMI, a “tax” that is often “forgotten”.

Think of the following example: we acquired a building with 20 subdivisions, each with about 300 m2 of floor space, with four bedrooms, a living room, a fully equipped kitchen, two bathrooms and an interior garden. As we are excellent “negotiating”, we managed to obtain this property, in a location whose rental rates correspond to 9%, for the modest amount of € 900,000 (VPT).

It looks like an excellent investment! Especially if it is possible to ensure this rate of return… But will I pay this “such tax”, called AIMI (Additional to the Municipal Property Tax)? It should be noted that the investment can also be made through a “company”.

Is it a relevant, let’s say, detail?

The AIMI is collected on the sum of the VPT (tax equity values), reported on January 1 of the year to which it relates, of the residential buildings and land for construction that are included in the property matrix held by natural or legal persons. In the case of being in the presence of a natural person, at the value of “their VPT”, the amount of € 600,000 is deducted.

We were able to draw a first conclusion right away: in the case of a legal person, the holder, a natural person, is deducted from € 600,000, instead of legal persons. In turn, as regards the rates to be applied to legal persons, in the present case, the rate of 0.4% would be applied, while to “persons” the rate of 0.7% (after the respective deductions).

As we can see, taxation has a significant impact during the decision-making process with regard to the investments made, namely regarding the AIMI, which may, on some occasions, be decisive when choosing the investment tool (not being the only one and it is not possible to analyze it autonomously, without specialized support).

Vanessa Mendes

CFO

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