Here is Portugal's new Real Estate Law

Here is Portugal's new Real Estate Law - Portugal Business News

Real Estate News Portugal - Here is Portugal's new Real Estate Law in 2026, including the list of tax rebates and advantages when buying, renting and selling property.

What is Portugal's new Real Estate Law in 2026?

Portugal's new Real Estate Law was published in the Government Gazette on May 20th, 2026, under law no. 97/2026. Portugal's new housing law approves tax relief measures to promote housing supply.

What are the main provisions of Portugal's new Real Estate Law in 2026?

The main provisions of Portugal's new Real Estate Law in 2026 are as follows:

1 - The reduction of the VAT rate from 23% to 6% on construction or rehabilitation contracts for residential properties.

However, this tax benefit only applies to properties with a sale price up to €660,982 or properties intended for rent with a monthly rent not exceeding €2,300. Property buyers that benefited from a 6% VAT rate and who do not use it as their primary and permanent residence as tax residents within six months of the acquisition date will have to pay a property transfer tax penalty equivalent to 10% of the property's taxable value.

2 - The Income tax rate on property income drops from 25% to 10% for landlords who charge rents up to €2,300.

This income tax reduction on property income includes lease agreements that are already in progress.

3 - People who sell a property are exempted from capital gains tax

The exemption from capital gains tax is provided that the proceeds are reinvested in properties intended for residential rental at moderate rents. This exemption is temporary and applies exclusively to transfers made between January 1, 2026, and December 31, 2029.

However, this reinvestment must be carried out between 24 months before and 36 months after the date of the transaction and the acquired property must be leased for at least 36 months in the first five years.

4 - Tax deductions on rent paid by tenants increase to 900 euros in 2026

Tenants will benefit from the increase in the annual tax deduction for rent paid, and the rental threshold rises from 700 to 900 euros in 2026, to reach 1,000 euros in 2027.

5 - Real Estate investors will obtain 100% exemption on property income for low-cost housing

Real Estate investors will obtain total exemption from IRS (Personal Income Tax) and IRC (Corporate Income Tax) on property income for contracts with rents not exceeding 80% of the median price per square meter in the respective municipality, with a minimum term of three years for permanent residence.

This property investment scheme is under Portugal's new Simplified Affordable Housing Scheme.

6 - Large property funds will obtain tax benefits on moderate residential leasing agreements

Investments by large property funds will obtain tax benefits if they allocate at least 70% of the construction area to moderate residential leasing for up to 25 years and the contract is signed with the IHRU (National Housing Institute). The property tax benefits include:

i) Exemption from IMT (Property Transfer Tax)

ii) Exemption from IMI (Municipal Property Tax) for the first eight years, followed by a 50% reduction in the IMI rate for the remaining period, and exemption from the additional IMI.

This property investment scheme is under Portugal's new Investment Contracts for Leasing scheme.