Buying a house in Portugal: New tax incentives

On 1 August 2024, exemptions were introduced to Portuguese real estate transfer tax and stamp duty for the purchase of a first permanent home by young people (foreigners or Portuguese nationals) up to the age of 35. The Ecovis experts explain the details of when exactly the tax benefits apply.

Real estate transfer tax (IMT = Imposto Municipal sobre a Transmissão Onerosa de Imóveis) and stamp duty are the two types of taxes that must be paid when purchasing real estate in Portugal. Under the new law, exemptions are possible under the following conditions:

• It must be the buyer’s first house (no other house licensed for habitation can be in their name)
• The house must have already been built and licensed for habitation
• The maximum value of the acquisition is EUR 633,453 (the exemption only applies to the taxes levied on the first EUR 316,772 of the value of the acquisition. Taxes must be paid on the remaining amount.)

The buyer

• must be a maximum of 35 years old
• must not be classified as a dependent for inland revenue purposes
• must not be the owner of a right over an urban property licensed for housing (lease not included)
• must not have been the holder of such a right in the previous three years

The definition of a “permanent home” also implicitly requires that the buyer must be a tax resident in Portugal. This means that the taxpayer must be resident in Portugal for more than 183 days in any period of 12 months or have a house with such conditions that suggest the intention of residing in the country (can be a rental).

It should also be noted that if a house is bought by a couple, these exemptions apply to any or both of the parties if they meet the requirements.

We will check to see whether the new tax incentives apply to you when purchasing a house.

Eloísa Ribeiro Santos, Partner, RBMS – Member of ECOVIS International, Lisbon, Portugal

The tax implications of the new law

The new exemptions mean that when buying a house with a value of EUR 316,772, the purchaser would save EUR 12,151.69 in IMT and EUR 2,534.18 in stamp duty, leading to a total saving of EUR 14,685.87. The tax benefit is the same for properties of a higher value up to the maximum of EUR 633,453.

A second issue in buying a house – the requirement for a down payment (usually at least 10%) – is also close to being solved, as a law allowing 100% financing has already been approved. Its implementation is only being held up by the wait for a favourable judgement from the regulatory authority.

These incentives are not only attractive to young people wanting to stay in Portugal or Portuguese emigrants wanting to return, but also for young people from other countries to looking to settle in Portugal, such as digital nomads, for example.

For further information please contact:

Eloísa Ribeiro Santos, Partner, RBMS – Member of ECOVIS International, Lisbon, Portugal
Email: eloisa.rsantos@rbms.pt

Bernardo Viana de Sá, Associate, RBMS – Member of ECOVIS International, Lisbon, Portugal
Email: bernardo.vsa@rbms.pt