Portugal Lifts Build Cost to €570/m², Bringing IMI Hikes in 2026

Homeowners got an unwelcome Christmas surprise: the Government has quietly raised the benchmark cost of construction that feeds into the Imposto Municipal sobre Imóveis (IMI) formula. From January, the tax authorities will assume it costs €570 per square metre to build, up from €532. Although the figure looks technical, it will influence how much IMI many families pay in the coming years—and it may land on your next tax bill sooner than you expect.

Quick facts at a glance

• €570/m² — new standard construction cost approved by Finance Ministry

• +7 % — size of the increase versus the previous benchmark

• €712.5/m² — effective reference value once the 25 % land component is added

• Applies to new homes, major remodels and properties re-assessed from January onward

• Existing properties face a separate automatic valuation update tied to inflation, projected at 4.5 % for housing and 6 % for commercial in 2026

What exactly has changed?

Under articles 38.º and 39.º of the Código do IMI, the Government must set an annual figure that reflects the average cost of construction. A brief notice in the Diário da República—signed by Secretary of State for Tax Affairs Cláudia Reis Duarte—did just that, pushing the number to €570. The figure was proposed unanimously by the National Urban Property Valuation Commission (CNAPU) after consulting INE data on labour, materials, energy and finance costs.

Because the law also adds 25 % for the plot of land, the true yardstick used by tax inspectors becomes €712.5 per square metre. That value feeds the equation that determines the Valor Patrimonial Tributário (VPT), the taxable value on which every municipality applies its IMI rate.

How will this hit your wallet?

For most properties that were last assessed in the past two or three years, the change will only bite when:

you finish a substantial renovation and file a fresh Modelo 1 declaration;

the Tax Authority schedules a new assessment; or

you buy a recently built home that is valued under the new table.

However, even owners of older homes are not spared: 2026 is the year of the triennial automatic update that brings VPT in line with inflation. Economists predict a 4.5 % uplift for housing; if you now pay €500 in IMI, the bill could rise to about €522.50—and that is before any municipal rate tweaks.

What municipalities can (and can’t) do

Câmaras Municipais set the rate—anywhere from 0.3 % to 0.45 %, nudging to 0.5 % if the municipality is under financial rescue. In the last fiscal year, 44 councils cut their rate and more than 200 adopted the legal minimum. Local leaders can soften next year’s hike by:

• keeping the base rate at 0.3 %;

• granting family-size rebates for households with dependants;

• offering discounts to properties with high energy ratings or those in urban-rehabilitation zones.

With municipal elections approaching, the pressure to lower IMI or extend exemptions is likely to intensify.

Who is angry—and why

The Lisbon Landlords Association (ALP) wasted little time, branding the decision a "gigantic rise" and accusing the Government of cashing in on the housing squeeze. The group reiterated demands to abolish the Adicional ao IMI (AIMI) and unfreeze rents.

Consumer-rights advocates have been quieter in public, yet they warn privately that the combined effect of higher mortgage rates and a bigger IMI bill could push more families toward budgetary stress.

Municipalities themselves have stayed largely silent, but insiders at the National Association of Portuguese Municipalities say councillors are crunching scenarios: a lower rate softens voter blowback but shrinks revenue just as EU funds for urban projects taper off.

What to keep an eye on

Owners planning to sell, rebuild or expand should check whether their property might trigger a new VPT evaluation in 2026. If so, budgeting for the higher €712.5/m² reference is prudent. Everyone else should monitor upcoming municipal budget meetings—the moment when local councils decide the exact percentage that will turn the central Government’s technical adjustment into a real-world invoice.

In short: while the new construction value will not hit every household immediately, it sets the stage for broader increases in Portugal’s most visible property tax. Staying informed—and lobbying town hall where you can—may be the best defence against sticker shock next autumn.