Between 2024 and 2026, Portugal introduced a series of significant housing reforms aimed at improving access to home ownership, increasing the supply of residential property, and making the market more attractive to private investors.
The changes are of particular interest to legal professionals, given their impact on the way real estate transactions are organised, transaction risk management, and the advice they give to investors.
To encourage home ownership, Portuguese lawmakers introduced a favourable tax regime for first-time buyers under the age of 35 who are resident in Portugal. The measures include full or partial exemptions from property transfer tax (known locally as IMT) and stamp duty on the purchase of a first main residence.
In addition, a state-backed mortgage guarantee scheme was created to ensure easier access to financing, and improvements were made to Portugal’s special ‘IRS Jovem’ income tax regime, which provides tax incentives for young workers.
The 2026 reforms also introduced a range of measures designed to encourage the construction, refurbishment, and occupation of residential housing. Key initiatives include the application of a reduced VAT rate of 6% to certain construction and renovation projects, along with preferential tax treatment for rental income derived from properties let under affordable housing schemes.
At the same time, Portugal amended the IMT regime applicable to real estate purchases by non-residents, with the rate now set at 7.5%. However, this measure may well prove incompatible with EU law and is likely to face legal challenges.
The legislator has also introduced mechanisms designed to encourage the reinvestment of capital gains from property sales into new residential developments intended for the rental market. Investors and landowners will need to assess carefully whether they qualify for the new regimes, the deadlines that apply, and the resulting tax implications.
One of the most important developments is the introduction of Investment Contracts for Rental Housing. These allow institutional investors to partner with public authorities to finance residential developments intended for the rental market. In return, investors can access a range of valuable tax incentives, including reliefs and exemptions from IMI (municipal property tax), AIMI (additional municipal property tax), IMT, VAT, and IRC (corporate income tax).
Portugal has also overhauled its planning and construction rules since 2024. The reforms have streamlined a number of administrative procedures, expanded the use of digital processes, and shortened approval times. The changes influence how projects are structured and scheduled, whilst also affecting legal due diligence and the assessment of regulatory risk.
Taken together, the reforms represent a significant milestone in the development of Portuguese real estate law, creating new opportunities for stakeholders in the residential property sector. At the same time, however, investors, developers, and property owners will increasingly need specialist legal and tax advice to ensure compliance with the new rules and secure access to the preferential regimes introduced by lawmakers.
15 June 2026
By Rogério Fernandes Ferreira & Romy Alfredo Bouery (French Desk) – RFF Lawyers, Lisbon (Portugal)
