President clears Portugal housing tax relief package

Portugal’s President António José Seguro has promulgated the government decree introducing tax relief measures for housing, clearing one of the final steps before the new regime can take effect. The package cuts VAT on some residential construction and lowers income tax on rental income tied to “moderate” rents.

According to a note published by the presidency on Tuesday, the decree implements tax measures aimed at boosting housing supply. The main changes include a cut in VAT on housing construction to 6% for homes intended for sale or rent within the new “moderate price” thresholds, and a reduction in the autonomous IRS rate on rental income from 25% to 10% for landlords charging moderate rents of up to €2,300 a month.

Under the new framework, a home sale price of up to €660,982 will be considered “moderate”, while in the rental market the ceiling will be set at 2.5 times Portugal’s 2026 minimum wage of €920, or €2,300 a month. The decree still needs to be published in the official gazette before the measures enter into force.

The package also raises the maximum tax deduction for tenants’ rents in personal income tax to €900 next year and to €1,000 in 2027. Other measures listed in the decree include a capital gains tax exemption when proceeds from home sales are reinvested in rental housing within the rent cap, and a fixed 7.5% IMT property transfer tax rate for non-residents buying homes, without exemptions or reductions.

Originally published at Eco.pt