The President of the Republic, António José Seguro, has enacted the housing tax relief package approved by the Government, ahead of the 24 May deadline. The decision opens the door to a set of changes that will reshape Portugal's real estate market and the taxation of developers, landlords and buyers.
According to the note published on the Presidency's website, the enacted text is the "Government decree that, under the authorisation granted by Law 9-A/2026 of 6 March, approves tax relief measures to boost housing supply".
Summary: Construction VAT drops from 23% to 6%, rental income IRS falls from 25% to 10%, IRC applies to only 50% of rental income, and IMT rises to 7.5% for non-resident foreigners.
What changes in construction VAT
The headline measure is the reduction of construction VAT from 23% to 6%. The reduced rate applies to:
- Home sales up to around EUR 660,000;
- Rentals with moderate rents between EUR 400 and EUR 2,300;
- Works whose licensing started between 23 September 2025 and 31 December 2029.
IRS and IRC: changes for landlords
The package also includes IRS and IRC benefits for rentals up to EUR 2,300:
- IRS on rental income drops from 25% to 10%;
- IRC applies only to 50% of rental income received by landlords.
Higher IMT for non-resident foreigners
In the opposite direction, the Government is raising IMT for non-resident foreigners to a flat rate of 7.5%. The increase does not apply to residents, buyers placing the property on the rental market, or Portuguese emigrants buying a home in Portugal.
Capital gains exemption on reinvestment
Another approved measure is the capital gains exemption on the sale of a residential property, provided the proceeds are reinvested in a home placed on the rental market for at least three years, with rents considered moderate.
Undivided inheritances still under debate
Outside this package, but within the same housing strategy, a bill creating a fast-track mechanism for resolving undivided inheritances is still under discussion in Parliament.
What it means for businesses and investors
For developers, builders, landlords and real estate investors, this package redesigns the entire tax framework for housing in Portugal. Request a no-obligation proposal or explore our tax simulators.
