Portugal Proposes Reduced VAT for Affordable Housing Sales and Leases Starting January 2026

• The Portuguese Government proposes tax incentives to address rising housing prices, effective January 1, 2026.
• A reduced VAT rate (6% mainland, 4% autonomous regions) will apply to construction or rehabilitation of residential properties for sale or lease, for projects started between September 23, 2025, and December 31, 2029, and completed by December 31, 2032.
• The reduced VAT rate applies only if the sale price does not exceed EUR 660,982 and monthly rent does not exceed EUR 2,300, with possible future updates to these thresholds.
• Additional conditions apply: for sales, the property must be acquired as a permanent residence and sold within 24 months of documentation; for leasing, the lease must be VAT-exempt, reported to tax authorities, be the first lease within 24 months of documentation, and the property must be leased for at least 36 months within the first five years.

Source: taxand.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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