The decree modifies the requirements for housing to qualify as social interest housing and increases various tax exemptions for income obtained from leased social interest housing. Taxpayers should review the requirements to determine if they might qualify for the tax benefits.

Uruguay's Executive Power issued Decree No. 129/020, which modifies Decree Nos. 355/011 and 34/017 by changing the requirements for real estate property to be considered social interest housing (i.e., low-income housing) and, therefore, subject to tax benefits.

Projects related to the construction, recycling, expansion or renovation of housing may qualify as social interest housing, if they meet specific requirements detailed in the regulations. Under the new decree, habitable areas equal to or greater than 25 square meters and equal to or less than 40 square meters are incorporated into the definition of housing projects and may be declared as studio apartments that comply with the municipal regulations.

The decree removes the 100-house cap on the number of houses that may be involved in one project.

Additionally, the decree modifies the tax benefits as follows:

1. The net wealth tax exemption for finished homes is extended from the year in which construction was completed to three years following the year in which the construction is completed.
2. Taxpayers may claim a refund for the value-added tax on the acquisition of goods and services incorporated into the housing for up to two years after the construction is completed (previously, only applicable the year in which construction was completed).
3. For rental homes, the corporate income tax (CIT) exemption for rental income will increase from 40% to 60% depending on the location of the home.
4. For homes acquired that will be rented in the future, the CIT, personal income tax and nonresident income tax (NRIT) exemptions for the income received from the leases will increase from 40% to 60% depending on the location of the home promoted.

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