Portugal Fast-Tracks Housing Tax Relief: 6% IVA, 10% IRS and 7.5% IMT

Portuguese households have little time to digest the government’s sweeping housing tax package. With Parliament scheduling a lightning vote for 9 January, MPs must decide whether cheaper IVA on building work, lower IRS for landlords, and a single 7.5 % IMT for most foreign buyers can finally unlock more homes and moderate rents. The outcome will ripple through everyone from first-time buyers in Braga to pensioners renting in Lisbon’s historic centre.

Snapshot

• Urgent vote: discussion and approval have been crammed into a single morning after the government invoked fast-track rules.

• Lower taxation for landlords: the flat IRS rate could sink from 25 % to 10 % on contracts below €2 300/month.

• Tax-free reinvestment of capital gains if the seller pours profits back into renda moderada rentals within three years.

• IVA cut to 6 % on new builds and refurbishments up to €648 000 or €2 300 in monthly rent.

• Heavier IMT for non-residents: a flat 7.5 % property transfer tax—unless the home is leased for at least 36 months.

• AIMI holiday for landlords charging up to €2 300 a month until 2029.

• Simpler licenses and a €1.34 B EIB credit line to finance 12 000 affordable units.

Why the rush?

The minority AD administration argues that spiralling rents, construction bottlenecks, and Portugal’s shrunken rental stock leave no room for slow deliberation. By requesting an urgent procedure, the cabinet bypasses the usual weeks-long committee stage and blocks opposition parties from tabling amendments. Socialist lawmaker Marina Gonçalves—herself a former housing minister—accuses Prime Minister Luís Montenegro of "short-circuiting" parliamentary scrutiny, yet admits the timetable can no longer be reversed. Should MPs give the package the green light, the text heads straight to President Marcelo Rebelo de Sousa, who can either promulgate or return it to the chamber.

What is on the table?

The draft authorisation spans four legal codes and touches every link in the housing chain. Among the headline items are the 6 % IVA on residential construction, an IRS cut to 10 % for landlords signing contracts longer than three years, and a full IRS exemption on capital gains when proceeds are reinvested in rentals priced below €2 300. Buyers aged under 35 keep their existing IMT exemption on first homes, while non-residents (excluding emigrants) face the new single 7.5 % IMT. The government also wants to auction 16 state-owned buildings in Lisbon and Porto and launch 14 public-private rental projects to swell supply. Crucially, officials insist the label renda moderada—up to €2 300—reflects market reality in hotspots such as Cascais, though critics say the threshold is detached from average wages.

The parliamentary math

Without an outright majority, the AD coalition depends on at least one opposition party switching from no to yes or, more plausibly, to abstention. The PS has hinted it may step aside if certain social-housing guarantees are added later; Chega demands tougher penalties on illegal sublets; PCP and BE denounce the plan as a gift to big landlords; PAN wants stricter energy-efficiency clauses, while Iniciativa Liberal toys with approving the IVA cut but not the IMT hike. A single abstention bloc could open the door because abstentions lower the number of affirmative votes required. Behind the scenes, industry federations push Socialists and Liberals to at least "let the experiment run" for two years.

Market reaction

Builders, agents and tenant groups see both opportunity and peril. The AICCOPN hails the 6 % IVA as a "game-changer" that could shave 15 % off final sale prices. The APPII applauds the clarity on capital-gains roll-over, yet warns the IMT surcharge risks scaring foreign equity away from Porto’s urban-renewal blocks. Landlord associations embrace the 10 % IRS, but inquilino advocates retort that calling €2 300 a "moderate" rent is "tone-deaf" when median household income barely reaches €1 100. Economists such as Vera Gouveia Barros argue the tax carrots will add supply only if licensing truly speeds up; otherwise, land prices will simply absorb the fiscal discount.

Looking across the border

Madrid’s recent ITP cuts for young buyers and tiered IRPF discounts for affordable leases delivered a modest uptick in new rental listings but failed to halt price growth in beach provinces. France opted instead for rent caps and targeted construction credits, yet still grapples with record prices around Paris. Lisbon policy-makers believe Portugal’s blend of tax relief plus simpler permits avoids the pitfalls witnessed in Spain (short-lived demand spikes) and France (developer flight). Opponents counter that genuine affordability came only when Spanish regions built large public-housing stocks—something Portugal’s proposal only hints at through its 12 000-unit EIB line.

Road ahead

If MPs endorse the legislative authorisation this Wednesday, the government promises to publish concrete VAT and IRS tables by March and have the 6 % IVA in force from 1 January 2026 for projects launched after 25 September 2025. A second parliamentary vote will still be required to transpose the measures into the actual tax codes, offering a narrow window for technical tweaks. Meanwhile, developers weigh land deals, tenants ponder lease renewals, and the President’s pen hovers—ready to sign or veto what could become the most consequential housing-finance package since Portugal’s 2012 troika programme.