IMT Exemption on Real Estate Resale – Deadline Extension

Law No. 56/2023, dated October 6, introduced several changes regarding the Municipal Tax on Onerous Property Transfers (IMT), among which we highlight the exemption from this tax for properties purchased for resale when the buyer is engaged in the business of buying for resale.

To benefit from the IMT exemption on the purchase of properties for resale, the property must be resold within one year (previously three years). If the properties acquired for resale are put to a different use or are not resold within the one-year period, or if they are resold again for the purpose of resale, the IMT exemption is forfeited.

The Tax Authority has now clarified, through binding information related to Cases No. 25744, 25651, and 25694, that this change in the deadline represents a significant modification in one of the essential assumptions of the regime for purchasing properties for resale, significantly limiting it. Therefore, it constitutes a substantive rule of a material nature. Since substantive rules that imply changes in the regime have an innovative character, determining that their scope of application applies to situations arising after their entry into force, the Tax Authority correctly concluded that this change to a shorter resale period is to be applied prospectively. It only applies to purchases for resale made from October 7, 2023, onwards.

Additionally, to benefit from the exemption on the acquisition of properties, beyond the requirement for the buyer to prove that they are habitually engaged in the resale of properties through a certificate issued by the Tax Authority showing that, in each of the two previous years, they resold properties purchased for that purpose, the property in question cannot be resold for further resale nor can it undergo any construction, improvement works, or other alterations that could change its Taxable Asset Value.

In cases where IMT was paid upon the acquisition of the property due to the legal conditions for exemption not being met, if the property has been resold, not for further resale, within one year, the tax is annulled by the head of the tax office upon the request of the interested party, accompanied by a document proving the transaction.