Law No. 9-A/2026, of March 6, authorised the Portuguese government to adopt a set of tax relief measures aimed at fostering housing supply in Portugal, particularly in the segments of owner-occupied housing and residential leasing at moderate prices.
The decree-law implementing these measures is expected to be published by the end of August and will be particularly relevant in clarifying the applicable regime.
As a preliminary note, two concepts introduced under this framework should be highlighted. In 2026, “moderate rent” is defined as a monthly rent not exceeding €2,300, while “moderate price” refers to a property acquisition value of up to €660,982.
Main tax measures
The following measures are expected to have the greatest impact in stimulating housing supply.
Property owners – an exemption from the taxation of capital gains arising from the transfer of residential properties where the proceeds are reinvested in the acquisition of properties intended for residential leasing at moderate rents.
Real estate developers, contractors, builders, and property owners – a reduced VAT rate of 6% for construction/rehabilitation works relating to properties intended either for sale for owner-occupied housing or for residential leasing at moderate prices. In the case of sale, the property must be transferred within 24 months from the start of its use. For leasing, the first lease agreement must be concluded within 24 months from the start of the property’s use, and the property must remain leased for at least 36 months within the first five years following that date.
Individual landlords:
A reduction of the personal income tax (PIT) rate to 10% on rental income derived from residential lease agreements with moderate rents; and
The introduction of a regime for partial VAT reimbursement on construction works intended for owner-occupied housing, corresponding to the difference between the standard 23% VAT rate and the 6% reduced rate.
Professional landlords – 50% of the rental income derived from residential leases with moderate rents will be excluded from taxation for corporate income tax (CIT) or PIT purposes.
Investors in real estate investment vehicles (e.g., real estate investment funds/ companies):
A variable reduction in the taxation of income earned by investors, down to a rate of 5%, provided that the vehicles hold residential properties leased/subleased under specific regimes, including the new Simplified Affordable Rental Regime (see below); and
A reduction of up to 50% in the stamp duty rate levied on the vehicle’s net asset value, depending on the proportion of assets allocated to residential lease/sublease agreements covered by the new lease investment contracts (see below).
Non-resident investors (who have never been tax residents in Portugal and do not become residents within two years) – the real estate transfer tax (RETT) rate will increase to 7.5% on the acquisition of urban properties where the property is not intended for residential leasing at moderate rents. To avoid this increased rate, the property must be leased within six months of acquisition and remain leased for at least 36 months within the first five years. It should be noted that this rate already corresponds to the one currently applicable to the acquisition of residential properties with a value exceeding €1,150,853.
Additional regimes envisaged
Under this legislative authorisation, the government may also introduce two additional regimes aimed at promoting residential leasing.
Lease investment contracts, entered into between the state and private investors for up to 25 years, with the purpose of promoting the structured supply of housing for lease at moderate rents. These contracts may include several tax incentives, such as:
An exemption from RETT and stamp duty on acquisition;
An exemption from municipal property tax (MPT) for up to eight years followed by a 50% rate reduction;
An exemption from additional MPT; A 6% reduced VAT rate on construction works.
Simplified Affordable Rental Regime, applicable to residential lease/sublease agreements qualifying as “affordable rental contracts”. These contracts will benefit from favourable tax treatment; notably, an exemption from PIT and CIT. Qualification requires compliance with certain conditions, including maximum rent limits corresponding to 80% of the median rents published by the National Institute for Statistics for the municipality of the property, and minimum contract durations of three years, or three months in the case of temporary residence.
Key takeaways
Overall, this legislative package appears to signal support for economic activity and investment in housing in Portugal. The diversity of the proposed measures seeks to address different participants in the real estate market, from individual property owners to institutional investors.
However, the practical effectiveness of these measures will largely depend on how the regime is detailed in the implementing decree-law and subsequently regulated through secondary legislation and guidance issued by the Portuguese tax authorities.
Particular attention should also be given to the reduction of VAT on construction works, probably the most emblematic measure within this tax package. If effectively implemented, it may represent a significant driver for residential construction and encourage the entry of new operators into the sector. It is also noteworthy that in the event of non-compliance with the regime’s requirements (e.g., allocation of the property to owner-occupied housing), the tax liability falls on the purchaser, through the application of an increased RETT burden, rather than on the real estate developer.
