The Portuguese government discussed several new housing measures at their Council of Ministers this week, and announced these measures to the press afterwards. The fine details aren’t yet known, because these basic measures have to be translated into a proposal for a new law, which will also have to be discussed and approved in Parliament. But in any case, we hereby list the proposals in their current form:
- Higher tax deduction for tenants (IRS)
- From 2026, tenants renting at “moderate prices” will be able to deduct up to €900 from their tax base.
- From 2027, that deduction rises to €1,000.
- The “moderate rent” threshold is referenced as being up to €2,300 in rent, with no further details
- Lower income tax rate for landlords
- Landlords renting under the “moderate rent” regime (up to €2,300) will benefit from a reduced IRS rate of 10% (down from 25%).
- The government also considers applying a cap in terms of household aggregated income (e.g. ~€5,000), meaning eligibility might depend on the landlord’s total income.
- Exemption from municipal surtax on IMI (property tax)
- Properties rented at the moderate rent level will be exempted from the additional IMI (AIMI) that otherwise might apply, at least until 2029.
- Higher IMT (property transfer tax) for non-residents (excluding emigrants)
- When non-residents (excluding Portuguese emigrants) buy property in Portugal, a higher IMT rate will apply.
- This is intended as a “shock” measure to shake up the housing and real estate market.
- Reduced VAT (IVA) on construction and leasing
- A 6% VAT rate will apply to the construction of houses whose sale value is up to ~€648,000.
- The same 6% rate will apply to rents up to €2,300 (i.e. the “moderate rent” ceiling).
- The idea is to encourage supply in high-pressure areas (e.g. Lisbon, Porto) by making costs lower.
- Less prior control in licensing / simplification of procedures
- The licensing process for new housing or housing projects will have less pre-control (i.e. fewer upfront bureaucratic hurdles) to encourage investment.
- The government intends to simplify both licensing and execution (building) procedures.
- Capital gains (mais-valias) exemption if reinvested in moderate-rent housing
- If a homeowner sells a property and reinvests the capital gain into properties that will be leased at moderate rents (≤ €2,300), then they will be exempt from paying IRS on the gain.
- Previously, the exemption applied only when the reinvestment was in one’s own primary residence.
- Support for construction workers’ housing / temporary accommodation
- The government states that there should be a “national effort” to provide dignified housing (temporary, on-site or near sites) to construction workers, though details are not yet clear.
- Stronger public guarantee for young home-buyers (≤ 35 years old)
- The state guarantee for credit to buy homes for young people (up to and including age 35) is increased by €350 million, bringing the total to €1,550 million.
- This guarantee can act as a state co-signer (fiador), covering up to 15% of the transaction amount.
- For eligible young buyers, this may allow them to finance 100% of the appraisal value (instead of the usual 90%).
- Applies to first home purchases of value up to €450,000, and to contracts signed through end of 2026.
- Removal of the 2% cap on increases in new leases; easier evictions
- The government proposes to remove the rule that limited rent increases to 2% for new lease contracts (previously, for properties already on the market in the past five years).
- For existing contracts, the usual inflation indexation factor still applies.
- The government also signals that it wants to facilitate evictions in cases of non-payment, so landlords can regain their property more quickly in case of default by tenants.
