Real Estate Taxation · Portugal · 2026

New Tax Benefits for the Portuguese Real Estate Sector

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.

1 The core concept: “moderate” price and rent

It is essential to note that the new tax benefits do not apply automatically to every property. Access is indexed to maximum thresholds defined for the year 2026:

Moderate monthly rent Up to €2,300.00 / month Equivalent to 2.5 times the projected minimum wage for the year.

Moderate sale price Up to €330,539.00 Corresponding to the ceiling of the second IMT bracket for primary permanent residences.

Important note: when calculating these limits, the total value of the transaction or contract is considered, including any separate agreements for furniture, equipment or services linked to the appreciation of the property.

2 Incentives for residential rental — IRS and IRC

In order to encourage the transfer of properties into the long-term rental market, significant tax relief measures have been created until 31 December 2029.

Individual landlords — IRS: a reduced autonomous tax rate of 10% applies to property income derived from contracts with moderate rent.
Corporate entities — IRC / Category B: for taxpayers with organised 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 may now apply the reduced VAT rate of 6% to construction or rehabilitation contracts for properties intended for:

Sale for the buyer’s primary permanent residence.
Exclusive use in the residential rental market.

In both cases, sale prices or rents must comply with the moderate thresholds above. In rental cases, the property must be placed on the market within 24 months after the issuance of the utilisation licence and 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 largely restricted to reinvestment in a primary permanent residence, has been expanded.

Individuals who sell certain properties and reinvest the proceeds into acquiring properties intended for moderate-rent leasing may benefit from a capital gains tax exemption, provided that the property remains rented for 36 months within the first 5 years.

5 Impact on non-residents: new IMT rate of 7.5%

As a measure intended to discourage purely passive or occasional investment, tax non-residents acquiring residential properties in Portugal will be subject to an increased IMT rate of 7.5%, losing entitlement to other exemptions.

The law provides a refund or correction mechanism if, within 2 years, the purchaser becomes a tax resident in Portugal or, within 6 months, places 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 1 September 2026.

Investment Contracts for Rental — CIA: executed with the IHRU for terms of up to 25 years, these grant cumulative exemptions from IMT, Stamp Duty, AIMI and IMI for up to 8 years.
Simplified Affordable Housing Regime — RSAA: focused on simplifying contracts and ensuring IRS and IRC exemptions for landlords who charge affordable rents based on the median tables provided by the INE.

Conclusion

Decree-Law no. 97/2026 draws a new map of opportunities for the Portuguese real estate sector, but it also introduces a high level of formal requirements. Given the complexity and constant overlap of tax regimes in Portugal, prior planning becomes indispensable for the viability and security of any real estate transaction. Consulting a trusted lawyer is strongly recommended in order to assess the eligibility and specific characteristics of each project or contract before making decisions with an impact on your assets.