Portugal has officially approved a new legislative authorization aimed at increasing housing supply through major tax incentives affecting real estate investors, landlords, developers, and private individuals.
The new framework was introduced through Lei n.º 9-A/2026 and authorizes the Portuguese Government to implement several tax relief measures related to residential construction, rehabilitation, rental activity, and housing investment.
For expatriates, foreign investors, landlords, and Portuguese tax residents, these measures may significantly impact future tax planning opportunities between 2026 and 2029.
Main Tax Measures Approved
1. Reduced 10% IRS Tax on Residential Rental Income
One of the most relevant changes is the proposed reduced autonomous IRS taxation rate of 10% for residential rental income.
This represents a substantial reduction compared to the current standard taxation rules applicable to Category F income.
The measure is intended to encourage long-term residential rental activity and improve housing availability in Portugal.
2. Capital Gains Exemption Through Reinvestment
The legislation also authorizes a capital gains exemption mechanism where proceeds from the sale of residential property may become exempt if reinvested into housing intended for residential rental purposes.
This could create significant planning opportunities for:
- Property owners selling Portuguese real estate
- Expatriates restructuring property portfolios
- Investors transitioning from short-term to long-term rental models
The final implementing decree will determine the detailed reinvestment conditions and timelines.
3. New IMT Rules for Non-Residents
A particularly important provision for international investors is the introduction of a proposed 7.5% IMT rate for non-residents acquiring residential property in Portugal.
This may materially change acquisition costs for foreign buyers and should be carefully assessed before completing real estate transactions.
International buyers should monitor the final implementation closely, especially where acquisitions are planned for:
- Investment properties
- Relocation purposes
- Golden Visa restructuring strategies
- Buy-to-let operations
4. VAT Reduction for Construction and Rehabilitation
The authorization also includes the application of reduced VAT rates to construction and rehabilitation works relating to:
- Primary residence housing
- Residential rental projects
- Affordable housing developments
In addition, a partial VAT refund regime may become available for private individuals constructing or rehabilitating their own primary residence.
This could become highly relevant for:
- Individuals building homes in Portugal
- Property rehabilitation projects
- International families relocating permanently to Portugal
5. Affordable Rental Regime (RSAA)
The Government was also authorized to implement a new “Regime Simplificado de Arrendamento Acessível” (RSAA), creating potential IRS and IRC exemptions for qualifying affordable housing contracts.
The regime may apply to:
- Residential rental contracts
- Subletting arrangements
- Municipal affordable housing programs
To qualify, contracts will generally need to comply with:
- Maximum rental thresholds
- Minimum lease durations
- Housing affordability criteria linked to official statistics
Important Deadlines
Several measures are expected to apply until 31 December 2029.
Certain VAT-related construction incentives may remain available for projects initiated between 25 September 2025 and 31 December 2029, with VAT becoming due no later than 31 December 2032.
International Tax Considerations
Foreign residents and expatriates should not assume these incentives automatically apply without broader tax analysis.
Several additional areas may require technical review, including:
- Portuguese tax residency status
- NHR / IFICI regime interaction
- Double taxation treaty implications
- Foreign property ownership structures
- Corporate vs personal ownership
- Portuguese Category F vs Category B qualification
- VAT registration obligations
- IMT exposure for non-residents
Cross-border investors should also evaluate how these changes interact with existing foreign tax obligations in jurisdictions such as the United States, United Kingdom, Canada, Germany, the Netherlands, and France.
Final Thoughts
Although this is currently a legislative authorization rather than the final implementing decree, the approved framework clearly signals Portugal’s intention to:
- Increase long-term housing supply
- Encourage residential rental investment
- Reduce taxation on qualifying housing activity
- Discourage speculative property usage
- Create targeted incentives for affordable housing
The practical application of these rules will depend on the final legislation expected to follow during 2026.
For taxpayers considering property investment, relocation, or restructuring existing Portuguese real estate holdings, early tax planning may become increasingly important before the final rules enter into force.
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