Portugal look to tax property with desirable view
Portugal is looking to introduce new tax conditions, which will see homes benefiting from a desirable outlook taxed accordingly. Properties built with a south facing view could be looking at a potential 20 percent tax. The tax will also reduce tax by as much as 10 percent for property located in less desirable locations; opposite a cemetery, ground floor dwellings and property sporting northerly views. This move will only apply to property built in the last five years, or dwellings currently experiencing reappraisal.
Officials at the tax authority have stated that this move is not to generate additional tax revenue, but rather to tax people according to the homes and luxuries they enjoy. The tax should introduce greater fiscal equity, whilst reflecting the variations in current house prices.
The move has angered some, as Portugal in recent years has built much of its block accommodation with south facing aspects, in an attempt to maximise the use of the sun for renewable and environmental purposes. Some feel they’re now being penalised for acting responsibly. The Association of Lisbon Homeowners also stressed that some homeowners with sizeable mortgages, could now find themselves facing serious financial difficulties. Most won’t have budgeted for this new tax, and in hindsight may have made different decisions when choosing a residence.
Having struggled to reduce the country's deficit, it’s hard to ignore that this could be a step towards increasing tax revenue. In 2010, Portugal’s fiscal deficit was a record 10 percent. The government had targeted a figure around 2.5 percent by 2015, but despite best efforts achieved 4.4 percent. According to EU fiscal rules, budget deficits should be no more than three percent of the country’s GDP.
Thankfully Portugal was spared a fine, as the EU opted to apply new fiscal paths for countries struggling with high repayment constraints. We can expect to see even more of these alternative taxes, as the EU block looks to balance the books following a turbulent year.