National Assembly approves housing tax package
The National Assembly approved in committee, on 18 February 2026, the housing tax package proposed by the Government, highlighting the reduction of VAT to 6% on the construction of properties intended for permanent housing. The measure is part of a set of tax changes aimed at strengthening the housing supply and easing the tax burden on families and property owners.
The proposal was approved with votes in favour from the Social Democratic Party, the Liberal Initiative, and the CDS – People’s Party. The Socialist Party voted against, while Chega and Livre abstained.
Reduction of VAT to 6% with new conditions
The reduction of VAT to 6% on the construction of properties for permanent housing underwent changes compared to the initial version. The application of the reduced VAT rate is conditional on the property being used as the buyer’s permanent home and on the buyer remaining in the property for a minimum period of 12 months.
If the property is not intended for permanent housing, or the owner does not remain in the property for the required minimum period (except in exceptional circumstances provided for in the IRS Code), an increase of 10 percentage points in IMT will apply.
These changes aim to ensure that the 6% VAT effectively benefits those who purchase a home for permanent residence, preventing abusive use of the tax regime.
Additional measures in the housing tax package
The approved housing tax package also includes the exclusion of capital gains taxation on the sale of residential properties when reinvested in the acquisition of properties for rental purposes.
The increase of the IRS deduction limit on rents paid by tenants was also approved, rising to 1,000 euros per year. In addition, a reduced autonomous IRS rate of 10% applies to rental income derived from housing rental contracts.
IMT and Stamp Duty exemptions reinforce incentives
The new housing tax package also provides for exemptions from IMT and Stamp Duty on the acquisition of properties intended for rental or sub-rental.
With the reduction of VAT to 6% and the other tax measures, the Government aims to stimulate the construction of permanent housing, increase rental supply, and promote greater stability in the real estate market. The impact of the 6% VAT and the new rules will now be monitored after final approval in plenary.
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