Portuguese President Antonio Jose Seguro announced on Tuesday a government decree introducing a package of tax relief measures aimed at expanding housing supply and addressing the country's housing crisis.
The package focuses on a new concept of “moderate price,” defined as a sales price of a residential property not exceeding 660,982 euros ($773,349) and a monthly rent capped at 2,300 euros ($2,691), equivalent to 2.5 times the national minimum wage.
For rental housing projects that meet the eligibility criteria, the tax rate on owner-occupied rental income will be reduced from 25 percent to 10 percent, while the VAT rate for related housing construction projects will be reduced to 6 percent. Landlords who sell properties and reinvest the proceeds in eligible rental housing will also be exempt from capital gains tax.
In addition, the limit for personal income tax deductions from rent payments by tenants will gradually increase from 700 euros ($819) to 1,000 euros ($1,117). Meanwhile, non-resident home buyers will be subject to a unified property transfer tax rate of 7.5 percent.
According to Portugal's National Institute of Statistics (INE), the country's House Price Index rose by 17.6 percent in 2025, accelerating significantly from the previous year and placing Portugal among the EU countries with the sharpest increases in house prices.
“There has been a structural imbalance between the available supply and the growing demand for housing, especially in large urban centers and coastal areas, where demographic and tourist pressure is greater,” said Nuno Afonso, CEO and founder of Grupo Rio, one of the largest construction and real estate development companies in Portugal.
