SRS Legal Shots – Tax - A new tax package to boost housing – Legislative authorisation

The Housing Crisis – Is the Solution Fiscal? - Legislative Authorisation for a New Housing Tax Package 

Law No. 9-A/2026 of 6 March, recently published, contains legislative authorisation enabling the Government to adopt tax relief measures to increase the supply of housing.

The main objectives of Law No. 9-A/2026 are to stimulate the construction and renovation of residential properties, as well as to boost rental activity at moderate prices.

Among the main measures provided for in the legislative authorisation (to be implemented by the Government by means of a decree-law within 180 days) are the following:

1. Introduction of a reduced VAT rate of 6% on the construction and renovation of housing that meets certain valuation criteria, with the aim of lowering construction costs and increasing the supply of housing.

2. Introduction of tax incentives for letting, through a reduced, separate personal income tax rate of 10% on property income derived from residential tenancy agreements.

3. In addition to the previous measure, creation of specific tax benefits for investment in rental property, for example through the introduction of a scheme for residential rental investment contracts involving various benefits in relation to Property Transfer Tax (IMT), Stamp Duty, Municipal Property Tax (IMI) and the IMI Surcharge.

4. Action in the field of capital gains on property, for example by allowing the exclusion of capital gains from personal income tax (IRS)

5. Benefits for tenants, through an increase in the ceiling for the rent deduction under personal income tax (IRS).

6. Tax incentives applicable to real estate investment funds that invest in rental properties, as well as to their participants or shareholders.

7. Introduction of a scheme for the partial refund of input VAT on construction works for properties intended for owner-occupied and permanent residence.

The legislative authorisation now provided by Law No. 9-A/2026 of 6 March follows on from various other tax initiatives taken in the past, also with the aim of increasing the housing supply, notably Law No. 56/2023 of 6 October, which became known as the ‘Mais Habitação’ Programme.