Portugal Sets the Rules for Its 25-Year Build-to-Rent Tax Contracts, and Investors Need Three Years' Property Experience
An order in force from 1 October sets how investors apply for contracts giving up to 25 years of property tax breaks, with rents capped at 2,300 euros. It came three months late.
Portugal has published the rules that let property investors sign its new build-to-rent contracts, which lock in tax breaks for up to 25 years. The order appeared in a supplement to Wednesday's Diário da República (official gazette) and takes effect on Thursday, 1 October. It comes more than three months after the deadline the decree creating the contracts set for it.
The contracts, called contratos de investimento para arrendamento (investment contracts for renting, or CIA), come from the housing tax package the government approved in May. The Portugal Brief reported on 20 September that neither of the package's two new rental schemes could be used, because the regulations had not been published. Wednesday's order, Portaria 447-A/2026, fills that gap for the investment contracts. It deals only with them; the separate simplified affordable-rent scheme is not part of it.
What an investor gets
The benefits are set in the May decree, Decree-Law 97/2026, and last for the life of each contract. For the homes a contract covers, they include:
- no IMT (property transfer tax) and no stamp duty when the investor buys the land or buildings;
- no IMI (council property tax) for up to eight years from the year of purchase, then IMI at half the rate for the rest of the contract;
- VAT at the reduced rate of 6 percent on building and renovation work;
- no additional IMI, the extra tax on large property holdings, while the contract runs;
- a refund of half the VAT paid on architects', engineers' and design fees;
- a 50 percent cut in the stamp duty charged on some property investment funds.
The IMT and IMI breaks are not automatic everywhere. Under the decree, each council's municipal assembly has to vote for them, on a proposal from the council.
The decree also gives investors protection against later changes in the law. If new rules on setting or raising rents upset the finances of a contract, the investor is entitled to compensation under the public procurement code.
What the investor must do
At least 70 percent of the building area in a contract has to be let as homes. Monthly rents cannot exceed the decree's "moderate" ceiling of 2.5 times the 2026 minimum wage, which at 920 euros works out at 2,300 euros a month. Rents can rise each year only by the legal update coefficient, and never above that ceiling. A contract can also be tied to the affordable-rent scheme, and then that scheme's lower rent limits apply as well.
Homes bought ready to let must be rented within one year of signing. New builds and renovations have up to five years. Once let, each home has to be under a rental contract for at least eight months of every full year the investment contract runs.
Wednesday's order sets who may apply. An investor can be a person or a company, but needs:
- more than three years of proven experience in property investment or development, or in property or rental management. The experience of a shareholder with at least 25 percent, a company the investor owns 25 percent of, or a board member also counts;
- properly organised accounts, and taxable profit not assessed by the tax authority's indirect methods;
- no tax or social security debts.
Applicants also sign a sworn declaration covering insolvency, money-laundering controls, criminal convictions and international sanctions lists.
How the process works
- The investor applies through an online platform run by the Instituto da Habitação e da Reabilitação Urbana (Institute for Housing and Urban Rehabilitation, or IHRU), giving the properties, the planned works, the number of homes and the contract length. The minimum term is 10 years and the maximum 25.
- The IHRU has 20 days to ask for corrections, or to send a draft contract. An investor who does not make the corrections within 30 days loses the application.
- The investor has 90 days to accept the draft, which is then approved by an order from the finance and housing ministers.
- Within 10 days of that approval, the IHRU signs for the state, and the investor then has 30 days to sign.
- Each January, the investor files an annual report on the platform. The IHRU passes the information to the tax authority by the end of February.
The order does not say when the IHRU's platform will open for applications, and it leaves the format of the annual report to a later order from the housing minister.
What happens if an investor breaks the terms
The IHRU can propose ending a contract if the investor fails to meet its conditions, falls behind on tax or refuses to provide information. The ministers decide. The investor then repays the tax breaks received: all of them for a breach in the first ten years, half after that, and 30 percent in the last five years, with interest. The homes cannot be sold separately; the whole contract can pass to a new investor only with the housing minister's consent.
What this means for you
- If you rent, nothing changes yet. The first homes under these contracts will take time to build or buy. When they come, rents will be capped at 2,300 euros a month and rises limited to the legal coefficient.
- If you are a small landlord, the experience rule and the requirement for organised accounts will rule out most first-time investors. The IRS and IRC breaks on rental income in the same package, covered in our May report on the decree, work differently.
- If you invest in property, check first whether your council's assembly has approved the IMT and IMI exemptions. Without that vote, the two largest local tax breaks do not apply.
