There are new fiscal measures for housing

Are we ready for what's coming?

In recent years, Portugal has experienced growing tension between those who want to buy a house and those who can actually do so. Prices have risen, renting has become more expensive, construction hasn't kept up with demand, and families have been increasingly pressured. The State has tried to respond with various measures over time, with mixed results.

Now, with the publication of the new housing decree-law (no. 97/2026), a new legislative package has arrived that changes the rules of the game for families, investors, landlords, and tenants. And there's a second piece in this puzzle, less talked about but equally decisive: the intention of Banco de Portugal to change the effort rate limits on mortgages.

I'm not a fan of celebrating legislation before seeing it applied. We've seen too many "reforms" that remained on paper. But this set of changes deserves careful analysis because it contains a shift in direction that should be understood before making decisions.

The clearest signal from this decree is this: the State realized that the housing problem in Portugal is not just about access to purchase. It's mainly about supply. And it tried to tackle both sides simultaneously.

What changes with the new decree-law

On the construction side, the most immediate measure is the reduction of VAT to 6% on construction and rehabilitation works, until 2029. The detail that many people didn't notice: this rate is no longer reserved only for those who buy for permanent residence. This is relevant because it removes one of the biggest barriers to private investment in rental housing, the fiscal penalty at the construction stage.

At the same time, those who are not residents in Portugal and buy a house will pay IMT at a flat rate of 7.5%, unless they rent it out at a moderate rent or become residents within 2 years. The message is clear: we want investment in rental housing, not in properties that remain closed.

For families and tenants

There are two positive signs. Tenants will be able to deduct more rent on IRS, 900 € in 2026 and 1000 € from 2027. It's not transformative, but it's a real relief. And rents that do not exceed 80% of the median rent of the municipality (by type, according to INE) are exempt from IRS under the new affordable rental regime, in effect since September 1, 2026, which may encourage landlords to lower the rents asked.

For landlords

The big change is the taxation of rents at 10% when the rent does not exceed 2300 € per month, in new and old contracts, for rents received from 2026 to 2029. This tax burden has long been an argument for keeping properties off the rental market. If the measure works, and is accompanied by legal stability, it could bring more houses to the market.

For investors

The most interesting point is the creation of a new tax regime, the CIA, with benefits for up to 25 years for those who build, buy, or rehabilitate properties for residential rental. Combined with the exemption of capital gains in IRS when there is reinvestment in rental housing, the State is trying to create an attractive business model for private capital to enter this segment in a structured way.

The direction is correct. The incentive for renting, the fiscal debureaucratization for those who want to build, and the stimulus to supply are, in theory, the right levers. The historical problem in Portugal was not the lack of legislative intention, it was the lack of execution, stability, and clarity.

The position of Banco de Portugal

Update (August 2026): Banco de Portugal confirmed the change. Since August 1, 2026, it recommends that banks ensure total monthly credit charges do not exceed 45% of net income (previously, 50%), with a small margin for exceptions. For a couple with 2500 €/month, the recommended limit goes from 1250 € to 1125 €.

The State gives with one hand, Banco de Portugal takes with the other

As I mentioned earlier, there's a second piece in this puzzle that cannot be ignored.

While the Government publishes measures to stimulate buying and renting, Banco de Portugal is studying a change to the rules for calculating the effort rate, the DSTI (Debt Service-to-Income). At the time this article was written, the limit was 50% and the proposal on the table pointed to 40% to 45%.

It seems like a small difference on paper. But in reality, it is not.

Practical example of a couple with 2500 €/month

Think of a couple with a combined net income of 2500 €/month. Under the rules of the time, the limit would be 1250 € (50%). With a limit of 40%, it would drop to 1000 €. That would be 250 € less in monthly credit capacity, which, in terms of financed capital, could represent 40 to 60 thousand euros less in approved mortgage, depending on the term and rate.

In a market where the median price of a property in Coimbra, Porto, or Lisbon is already well above 200,000 €, this difference is not marginal. It is decisive.

The contradiction no one says out loud

The Government reduces VAT on construction, creates tax benefits for renting, facilitates private investment. All this points to a more active market, with more transactions, more credit, more housing available.

Banco de Portugal, on the other hand, moves in the opposite direction: it wants to ensure that banks do not end up with credit portfolios overloaded by families with excessive effort rates. The prudential argument is legitimate, no one wants to repeat the mistakes of 2008. But the moment creates a real tension between economic policy and housing policy that still has no clear answer.

Who is most penalized

Those most affected will be those on the threshold of access to credit: young people with average incomes, single-parent families, first-time homebuyers without family support. Precisely the profile that the measures of Decree-Law no. 97/2026 try to protect. The irony is hard to ignore.

Investors with greater financial solidity and buyers with already paid-off properties will feel this impact less. For them, the equation changes little. For those starting out, it changes a lot.

More than new laws, the market needs clarity and specialized support

What will determine the success of these measures is their practical application: municipalities licensing faster, banks financing with criteria, and owners and investors trusting that the rules remain.

It is in this scenario, where the rules "pull" in opposite directions, that specialized support becomes indispensable and decisive.

Knowing if you have room for effort rate, how to structure existing credit to free up financing capacity, or if it makes more sense to consolidate debts before applying for a new mortgage. These are decisions that determine whether you can, or cannot, buy, invest, or move house in the next 12 months.

Because in the end, what can open opportunities for some, can make access more difficult for others. And in a market where the rules change so quickly, understanding the future impact of each decision makes all the difference.

See you soon,
Ricardo Ferreira