What are Portugal’s fiscal incentives to combat the housing crisis in 2026?

Valerie Charoux
3 days ago
4 min read

Government of Portugal News - The Portuguese Government has submitted a draft law to combat the housing crisis on December 18^th 2025, through a set of fiscal incentives, with Portugal’s Housing support now reaching around 1 billion euros in less than two years. Here is the list of Portugal's tax incentives for companies operating in the Real Estate sector and for tenants in 2026:

1 – What are Portugal fiscal incentives in the Real Estate sector in 2026?

Portugal fiscal incentives in the Real Estate sector cover not only families, but also businesses and investment funds, to boost the construction and availability of housing for sale or rent at moderate prices.

This set of incentives aims to directly benefit the entire real estate market value chain by reducing taxation on both economic agents responsible for increasing the housing supply and middle-class families, thereby lowering the costs associated with buying and renting residential properties.

2 – What are Portugal’s VAT incentives for the Construction sector in 2026?

Portugal’s VAT incentives for the Construction sector include applying the reduced VAT rate to construction projects involving residential properties where the price does not exceed €648,000 in the case of purchase for primary and permanent residence, or where the rent does not exceed €2,300 in the case of residential rental.

In the case of "self-construction," that is, when construction services are directly acquired for a property intended for one's own permanent residence, the Government's proposal stipulates that the purchaser may request a refund of the difference between the standard VAT rate and the reduced rate.

3 - What are Portugal IRS (Income Tax) incentives for the Real Estate sector in 2026?

Portugal IRS (Income Tax) incentives for the Real Estate sector start in 2026 and continue until the end of 2029. The autonomous tax rate applied to moderate-value rents under the Personal Income Tax (IRS) will be reduced from 25% to 10%.

In the case of lease agreements covered by the Simplified Affordable Housing Scheme (where rents are less than 80% of the median rent for the municipality), the rents are exempt from income tax.

The Government also proposes to exempt capital gains on real estate from income tax when the proceeds are applied to properties for residential rental at moderate prices.

4 - What are Portugal’s Investment incentives for Residential Leasing in 2026?

Portugal’s Investment incentives for Residential Leasing include the creation of investment lease agreements ("CIA"), lasting up to 25 years, in which at least 70% of the construction area is allocated to moderate rents, under which the following benefits may be granted:

• Exemption from Property Transfer Tax (IMT) and Stamp Duty on the acquisition of land for construction and other urban buildings for the construction or rehabilitation of properties intended for residential rental.

• Exemption from IMI (Municipal Property Tax) for a period of up to 8 years and a reduction of up to 50% of the IMI rate for the remaining period of the CIA (Certificate of Acquisition of Property).

• Exemption from Additional IMI tax during the term of the CIA;

• Reduced VAT rate on construction contracts;

• 50% VAT refund on architectural services, projects, etc.

• 50% reduction in Stamp Duty in proportion to the assets used for residential leasing held by an Alternative Investment Undertaking.

5 - What are Portugal's fiscal incentives for corporate tax on rental income in 2026?

In the case of companies, Portugal fiscal incentives for corporate tax on rental income rental income derived from lease and sublease agreements with rents not exceeding €2,300 is considered at only 50%, with rental income from lease agreements covered by the Simplified Affordable Housing Regime being exempt from Corporate Income Tax.

6 - What are Portugal’s fiscal incentives for taxation of investment funds in the real estate sector in 2026?

Portugal’s fiscal incentives for taxation of investment funds in the real estate sector where 5% of the assets are allocated to affordable housing, the Government's proposal foresees the taxation of only 5% of the income distributed in the year following its receipt, in proportion to the income resulting from affordable housing contracts.

7 - What are Portugal’s fiscal incentives for first-time homebuyers in 2026?

Portugal’s fiscal incentives for first-time homebuyers include income tax benefits, as well as an exemption from Property Transfer Tax (IMT) and Stamp Duty provided the property is affordable and intended exclusively for their own permanent residence.

8 - What are Portugal’s fiscal incentives for housing for young people in 2026?

Portugal’s fiscal incentives for housing for young people include incentives to support young people in acquiring their first permanent home, through exemption from Property Transfer Tax (IMT), Stamp Duty, and Public Guarantee, as well as measures already adopted by the Government to strengthen the housing supply, either through the construction of new homes or through the provision of public assets for housing.

9 - What are Portugal’s income tax incentives for tenants in 2026?

Portugal’s income tax incentives for tenants include the limit for deductions from income tax related to rental expenses that will increase to 900 euros in 2026 and to 1,000 euros from 2027 onwards.