It should be emphasised that, following its approval at the general stage, the Housing Tax Package was also approved at the committee stage on 18 February 2026. The proposals must still be subject to final approval, promulgation, and publication in the Diário da República, and will only enter into force thereafter.
Among the measures approved, one of the most significant is the reduction of the VAT rate from 23% to 6% on the construction and refurbishment of residential properties, provided that the sale price does not exceed EUR 660,022 or that the monthly rent does not exceed EUR 2,300. This measure may have a direct impact on the cost of developing new housing and on the economic feasibility of urban rehabilitation projects.
In the field of leasing, the package provides for an increase in the IRS (personal income tax) deduction available to tenants, which may reach EUR 900 in 2026 and EUR 1,000 in 2027. This solution aims to reduce the tax burden on tenants and thereby mitigate the effects of rising rents.
In parallel, an exemption from IRS and IRC (corporate income tax) has been approved for income derived from lease agreements with moderated rents, defined as rents set at 20% below the median rent in the respective municipality. This measure is intended to encourage the placement of properties on the market at more affordable price levels, fiscally rewarding conduct aligned with that objective. At the committee stage, an exemption from IMT and Stamp Duty payable on the acquisition of properties intended for residential rental was also introduced.
With regard to real estate capital gains, particular note should be made of the tax exemption for taxpayers who reinvest in housing at moderated price levels within a five-year period. This solution seeks to promote housing mobility and redirect investment towards mid-price segments.
One of the structural innovations of the package is the creation of Investment for Lease Contracts (Contratos de Investimento para Arrendamento – CIA), a regime providing tax benefits for investors who undertake the construction, refurbishment or acquisition of properties for long-term lease, for periods that may extend up to 25 years. This instrument is designed to introduce greater predictability and stability into the long-term rental market.
The package also includes amendments to the legal frameworks governing urban planning permits, urban development, construction and urban rehabilitation, signalling an integrated approach between tax policy and spatial planning policy.
From a legal and economic standpoint, these measures confirm an increasing tax differentiation based on the use assigned to the property and the nature of the transaction. The same asset may be subject to significantly different tax treatments depending on whether it is allocated to moderated-price housing, long-term leasing or investment without a residential use.
For owners, developers and investors, this new framework reinforces the importance of prior tax and legal analysis in real estate transactions. The investment structure, the intended use of the property and the holding period are becoming increasingly relevant from a tax perspective.
Author: Fábio Seguro Joaquim