Senate approves income tax deduction for rent expenses

The Senate Economic Affairs Committee approved this Tuesday (5th) a bill that allows the deduction of expenses with rent of residential properties for the next five years from the Income Tax.

The proposal also provides for the exemption of a portion of the resources obtained by owners who rent residential properties.

The bill, authored by Senator Alexandre Silveira (PSD-MG), was approved in a final manner by the commission. This means that it can go straight to the Chamber of Deputies, without the need for a vote on the Senate floor — unless senators present requirements to that effect.

The proposal amends the Income Tax legislation to provide benefits for landlords and tenants, in addition to providing for a fine for cases of omission or false declaration of receipt of rents.

According to the text, until the year 2028 – calendar year 2027, for the purposes of personal income tax declaration -, the amounts paid in the lease of residential properties can be deducted in the annual returns. Only ancillary expenses, such as condominium fees and IPTU (Imposto Predial e Territorial Urbano) will need to be deducted.

The text of the bill also seeks to benefit the other end of the business, the property owners who put them up for rent. The proposal provides for an income tax exemption of 75% of the resources related to the receipt of rent. The rule is valid for the same period, until the year 2028.

“The intention of the project is to exempt the Brazilian who proves that he does not have any other property and that he pays rent. The proposal will deduct the amount with rent from the housing in the Income Tax. The moment lived with the pandemic had an impact on people’s income and this project will mainly contribute to families with more financial difficulties”, said Alexandre Silveira.

Another provision establishes fines for those who provide false information about the receipt of rent amounts. According to tax legislation, fraudsters will be subject to fines of 75% on “the entirety or difference of tax or contribution in cases of non-payment or collection, non-declaration and inaccurate declaration”.

Silveira’s project determines that this percentage will be doubled in cases where the taxpayer provides an inaccurate statement for failing to inform or inaccurately informing amounts received for the residential lease of a property.

During the session, some senators questioned the author about the merits of part of the bill, in particular the benefits to homeowners.

“A citizen can own an apartment building, with 20 apartments, receive a very large amount of rent and, simply, for five years, he will have a reduction in this tax that he should pay by 75%. I think this is quite complicated” , said Senator Oriovisto Guimarães (Podes-PR).

“In this aspect of the owner who receives being exempt, I don’t see any social merit”, he added.

Silveira then replied that the purpose of the proposal is precisely to encourage the payment of taxes and, in this way, to inhibit tax evasion.