New housing tax package brings changes to income tax, property transfer tax, and rent, and requires careful financial decisions

A new framework for the housing market

The Portuguese real estate market continues to face significant challenges. Rising home prices, difficulty accessing mortgage loans, and rising rents have put pressure on thousands of families. In this context, the Government has approved a new housing tax package that introduces significant changes to various taxes associated with the real estate sector.

The changes cover areas such as personal income tax (IRS), property transfer tax (IMT), stamp duty, rental, and real estate reinvestment, aiming to facilitate access to housing and stimulate a greater supply of properties on the market.

But do these measures actually mean lower taxes for those who buy, sell, or rent a home?

Tax benefits for renters

One of the most significant measures relates to tenants.

The possibility of deducting rent on the IRS (personal income tax) remains, but the annual deduction limit increases to 1,000 euros for lease agreements intended for permanent housing.

To benefit from this tax advantage, it is essential that:

  • The lease is registered on the Finance Portal;
  • Rent payments are properly reported;
  • There are electronic receipts issued by the landlord.

This change could represent significant savings for many families, especially at a time when housing costs account for a significant portion of monthly income.

In addition, tenants will now have greater ability to rectify situations where the lease has not been properly reported to the Tax Authority, contributing to greater transparency in the rental market.

Capital gains with new exemption opportunities

Taxation of capital gains resulting from the sale of one’s own permanent residence is also undergoing significant changes.

Until now, the personal income tax exemption depended essentially on reinvesting the proceeds from the sale into a new primary residence.

Under the new tax framework, there are now situations in which this exemption may apply when the proceeds are reinvested in properties intended for affordable housing rentals or moderate-rent housing, provided that all applicable legal requirements are met.

This measure aims to encourage homeowners and investors to put more properties on the rental market, helping to increase the available supply and stabilize prices.

Buying a home may become more affordable

For those looking to purchase their own permanent home, there are also important new developments.

The tax package provides benefits that can significantly reduce the initial costs associated with purchasing a property, especially in situations covered by affordable housing programs.

Among the measures, the following stand out:

  • Possible exemptions from IMT on the first purchase;
  • Reduction or exemption from Stamp Duty on certain transactions;
  • Specific incentives for certain buyer profiles.

These benefits can represent a significant reduction in the amount needed to complete a home purchase, making the process more accessible for many families.

Urban renewal remains a priority

The renovation of the housing stock continues to play a central role in public housing policies.

The new tax framework maintains incentives for property renovation projects, promoting the enhancement of existing housing stock and helping to increase the housing supply without the need for urban expansion.

Among the potential benefits are:

  • Reduced VAT rates on certain construction works;
  • Tax benefits associated with urban rehabilitation;
  • Incentives for placing renovated properties on the housing market.

These measures may continue to boost the renovation of buildings in urban centers and historic districts.

The actual impact depends on financial decisions

Despite the announced benefits, it is important to understand that no tax measure can replace a careful financial analysis.

The purchase, sale, or rental of a property continues to depend on fundamental factors such as:

  • Stability of household income;
  • Mortgage interest rates;
  • Debt capacity;
  • Long-term financial goals;
  • The specific situation of each household.

Therefore, before making any real estate decision, it is advisable to thoroughly analyze the financial and tax implications of the transaction.

What should buyers, homeowners, and investors do?

Given this new scenario, there are some steps that can help maximize the available benefits:

For buyers:

  • Assess whether there are exemptions applicable to your case;
  • Compare different financing solutions;
  • Calculate all costs associated with the purchase.

For owners:

  • Verify the tax status of the properties;
  • Analyze reinvestment opportunities with tax benefits;
  • Ensure proper reporting of lease agreements.

For investors:

  • Examine incentives related to affordable housing;
  • Evaluate opportunities in urban renewal;
  • Review investment strategies in light of the new tax rules.

Conclusion

The new housing tax package introduces changes that could result in tax savings for many Portuguese citizens. However, the benefits vary depending on each situation and require careful analysis to be fully realized.

More than just a simple tax cut, these measures represent an attempt to make the real estate market more accessible, balanced, and sustainable.

Making informed decisions will continue to be the most important factor for anyone looking to buy, sell, rent, or invest in real estate.

Need help with this topic?

Cristiano Torres
Real Estate Consultant — MaisConsultores TEAM
📱 960 404 029
✉️ cristianotorres@maisconsultores.pt

🏢 AMI: 23990

👉 Contact me for a no-obligation consultation.