Changes planned for Property Transfer Tax (IMT), Municipal Tax (IMI) and affordable housing in 2026

Changes planned for Property Transfer Tax (IMT), Municipal Tax (IMI) and affordable housing in 2026  

 The government's housing package bills were approved in general terms in Parliament: one proposal with tax relief measures to encourage renting and construction at moderate prices, and another proposal with changes to licensing, urbanization and urban rehabilitation.

 

IMT

The State Budget proposal proposal for next year foresees a 2% 2% update in the IMT tax brackets. The update of the brackets means that they increase the tax-exempt limits. Those who buy their own permanent home will benefit from an exemption up to 106,346 euros.

 

Youth IMT: Exemption up to €330,539

The Youth IMT continues to fully exempt those who buy properties up to €330,539 from paying IMT and stamp duty. 330.539 For homes valued between this amount and €660,982, a partial exemption applies: you only pay tax on the difference between the final price and €330,539, at a rate of 8%. Above €660,982, there is no exemption.

To benefit from this exemption, you must:

• Be under 35 years old;
• Buying your first home, which must be intended for permanent residence;
• You cannot be the owner or co-owner of a second property or part of a property;
• You cannot have been an owner or co-owner in the last three years.

 

IMT (Property Transfer Tax) for second homes

Without the exemption benefits, the IMT rate for second homes continues to apply to the deed value or market value, whichever is higher, with progressive rates that can reach 7.5% or more, depending on the value and location.

Non-Residents: An increase in IMT (Municipal Property Transfer Tax) rates is expected for buyers who do not have tax residence in Portugal, excluding emigrants; the proposed law has not yet been published, therefore, at this stage, it is not possible to accurately determine the terms and conditions of its implementation.

Exemption from IMT, Stamp Duty and other charges in the case of the transfer of rural properties

Transfers of contiguous or adjoining rural properties are exempt from IMT and Stamp Duty, regardless of their economic purpose, when intended for land consolidation operations.

The Circular Letter No. 40129/2026dated January 8, 2026, publishes the practical tables for the Municipal Property Transfer Tax (IMT), in effect from January 1, 2026.

 

Municipal Tax (IMI)

For IMI calculation purposes, the following must be considered:

– The taxable property value (VPT), which is the value of the property registered with the Tax Authority.

– The district and municipality where the property is located.

– The type of property – urban / industrial / rural

– The number of children, as many municipalities offer deductions based on family size..

 IMI Exemption

There are two types of exemption: temporary and permanent.

Temporary

When purchasing a first home or carrying out rehabilitation works, you may be entitled to a temporary IMI exemption, but the municipality where the property is located must adhere to this measure. This exemption applies whenever the property is for primary and permanent residence, has a property value of less than €125,000, and the gross annual income of the household does not exceed €153,300 per year. The temporary IMI exemption is granted for three years, and you can only benefit from this measure once. However, under the More Housing Program, the deadline can be extended for another two years, provided that the property was acquired between 2020 and 2022.

Permanent

Permanent IMI exemption is intended for low-income families with low-value assets: households with a gross annual income of 16.398 EUR are exempt, provided that the market value of the properties (rural or urban) they own does not exceed 71.296 EUR.

The best way to find out the tax rate applied by the municipality where you own the property is to access the Tax Authority portal and consult the IMI rates.In 2026, you will have to consult the rates applied for the year 2025, because, in fact, we are paying the IMI for the previous year. Every year, in April, the Tax Authorities begin notifying taxpayers to pay the IMI in May. This is the month for payment of this tax which, depending on the amount, can be spread over two or three installments.

The IMI (Municipal Property Tax) rate to be applied in 2026 has already been announced by the vast majority of the 308 Portuguese municipalities, as revealed by data published on the Finance Portal. This year, only four municipalities decided to apply the maximum IMI rate of 0.45%: Cartaxo, Nazaré, Oeiras, and Vila Real de Santo António.

 

Affordable housing 2026

In 2026, rental support will focus on tax incentives for landlords and tenants.

 Benefits for tenants

Income Tax Deduction: the annual deduction for rent will increase to €900 (instead of the €700 deductible in 2025) for affordable rental contracts, progressively increasing.

Rental Guarantees: Reinforced monthly support for families with payment difficulties will be implemented through IHRU (National Housing Institute), with a significant budget for 2026.

 For landlords

Tax incentives: reduction of the income tax rate on property income from 25% to 10% for residential lease agreements with monthly rents up to 2.300 EUR, benefiting individuals and companies.

Reduced VAT: application of a 6% VAT rate on the construction of properties intended for sale or rent (with rents up to €2,300), with control and term rules.

Reinvestment incentives: exemption from capital gains tax on the sale of houses, if the value is reinvested in properties for affordable rent.

Investment contracts for rental (CIA): creation of long-term contracts with incentives for those who place properties on the affordable rental market – fostering the affordable rental market with long-term contracts (up to 25 years). These contracts, aimed at increasing the supply of real estate, focus on projects where at least 70% of the area built is intended for residential rental, with maximum rents not exceeding €2,300. The objective of this measure is to increase investor confidence and the supply of homes at prices compatible with family incomes, offering longer-term contracts.

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