The tax landscape of the Portuguese real estate sector has undergone a profound transformation with the entry into force of Decree-Law no. 97/2026, dated May 20th. This statute implements a comprehensive package of tax benefits (affecting IRS, IRC, VAT, IMT, IMI, and Stamp Duty) aimed at boosting construction, rehabilitation, acquisition, and the residential rental market.
For investors, real estate developers, landlords, and families, the new legislation opens up a significant range of opportunities. However, eligibility strictly depends on compliance with rigorous legal and temporal criteria.
Below, we highlight the most critical points and the main practical implications of this legislation.
1. The core concept: “moderate” price and rent
It is essential to note that the new tax benefits do not apply automatically to any property. Access is indexed to maximum thresholds defined for the year 2026:
● Moderate monthly rent: The maximum limit is set at €2,300.00/month (equivalent to 2.5 times the projected minimum wage for the year).
● Moderate sale price: The limit is fixed at €330,539.00 (corresponding to the ceiling of the 2nd bracket of IMT for primary permanent residences).
Note: For the calculation of these limits, the global value of the transaction or contract is taken into account, including any separate agreements for furniture, equipment, or services linked to the property’s appreciation.
2. Incentives for residential rental (IRS and IRC)
With the purpose of shifting properties into the long-term rental market, windows of significant tax relief have been created until December 31st, 2029:
● Individual landlords (IRS): Application of a reduced autonomous tax rate of 10% on property income derived from contracts with moderate rent.
● Corporate entities (IRC / Category B): For taxpayers with organized accounts, property income from moderate rent contracts will only be taxed on 50% of its taxable base.
3. Reduced VAT at 6% for construction and rehabilitation
Developers and builders are now eligible to apply the reduced VAT rate (6%) to construction or rehabilitation contracts for properties intended for:
● Sale for the buyer’s primary permanent residence (Habitação Própria e Permanente – HPP);
● Exclusive use in the residential rental market.
In both cases, sale prices or rents must respect the aforementioned “moderate” thresholds. Additionally, regarding rentals, the property must be placed on the market within 24 months after the issuance of the utilization license and must remain rented for at least 36 months within the first 5 years.
4. Relief on the reinvestment of capital gains
The traditional tax exclusion on capital gains (previously strictly restricted to reinvestment in a primary permanent residence) has been expanded. Now, individuals who sell certain properties and reinvest the proceeds into acquiring properties intended for moderate-rent leasing (with the obligation to maintain them rented for 36 months within the first 5 years) can benefit from a capital gains tax exemption.
5. Impact on non-residents: new IMT rate of 7.5%
As a measure to discourage purely passive or occasional investment, tax non-residents acquiring residential properties in Portugal will now be subject to an increased IMT rate of 7.5%, losing entitlement to other exemptions.
However, the law provides a clawback/refund mechanism if, within 2 years, the purchaser becomes a tax resident in Portugal, or if, within 6 months, they place the property on the moderate rental market.
6. New large-scale regimes: CIA and RSAA
For institutional investors and larger-scale projects, two new regimes stand out (taking effect from September 1st, 2026):
● Investment Contracts for Rental (Contratos de Investimento para Arrendamento – CIA): Executed with the IHRU (Housing and Urban Rehabilitation Institute) for terms of up to 25 years, these grant cumulative exemptions from IMT, Stamp Duty, AIMI (Additional IMI), and an IMI exemption for up to 8 years.
● Simplified Affordable Housing Regime (Regime Simplificado de Habitação de Custos Acessíveis – RSAA): Focused on simplifying contracts and ensuring IRS/IRC exemptions for landlords who charge affordable rents based on the median tables provided by the INE (National Statistics Institute).
Conclusion: prudent planning and documental rigor
Decree-Law no. 97/2026 draws a new map of opportunities for the Portuguese real estate sector but also introduces a high level of formal requirements. Non-compliance with assignment deadlines, failures in communicating contracts to the Tax Authority, or deviations from price limits will result in the retroactive loss of benefits, additional tax assessments, and compensatory interest.
Given the complexity and constant overlapping of tax regimes in Portugal, prior planning becomes an indispensable tool for the viability and security of any real estate transaction. Therefore, it is highly recommended to consult a trusted lawyer to analyze the eligibility and specificities of any real estate project or contract before making decisions with an impact on your assets.

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