President Seguro Promulgates the Habitação Fiscal Package on Tuesday 12 May — 10% IRS Cap on Rents Up to €2,300, 6% IVA on Moderate-Price Construction and a First-Buyer IMT Exemption Hold Through 31 December 2029

President António José Seguro promulgated the Government's housing fiscal package on Tuesday 12 May 2026, completing the legislative cycle that began with Law 9-A/2026 — the parliamentary authorisation passed on 6 March — and the Council of Ministers' late-March approval of the implementing decree-law. The decree is now awaiting publication in the Diário da República before it can take full effect, but its core architecture is fixed: a 10% IRS cap on residential rental income, a 6% VAT rate on construction and rehabilitation tied to a "preço moderado" threshold, and a buyer-side IMT exemption aimed at first-time primary-residence purchases.

The package anchors itself on two ceilings:

• Moderate sale price: €660,982 (the second IMT bracket for primary residences, indexed annually)
• Moderate monthly rent: €2,300, calculated as 2.5 times the 2026 minimum wage of €920

Landlords renting at or below the €2,300 threshold may elect the new 10% IRS rate on rental income, replacing the standard 28% — a measure that runs through 31 December 2029. Category B taxpayers operating under organised accounting see only 50% of rental income taxed in parallel, again with a 2029 sunset. The Accessible Rental Simplified Regime (RSAA), preserved untouched, continues to offer a full IRS exemption to landlords pricing at roughly 80% of council median rents.

On the construction side, VAT drops to 6% for new builds and rehabilitation works delivering homes priced or rented within the moderate thresholds. A parallel personal-use measure refunds a portion of VAT for individuals carrying out works on their primary residence between 25 September 2025 and 31 December 2029, with the claim window stretching to 31 December 2032. The construction relief lands at the same time as the Government's tightening of the Alojamento Local rules, redirecting incentives towards long-term residential supply rather than short-term tourism stock.

First-time buyers of a primary residence at a moderate price are exempt from IMT and benefit from an additional Imposto do Selo (TGIS) deduction. On the seller side, the capital-gains exemption for reinvestment in another primary residence has been broadened: it now survives if reinvestment fails for reasons outside the seller's control, such as a cancelled deed or documentation delay. Tenants are not left out — the IRS rental deduction climbs to €900 in 2026 and €1,000 in 2027.

What This Means for Expats

• Landlords: If your contract rents at or below €2,300/month, the IRS cut from 28% to 10% on rental income is the single largest fiscal upgrade in a decade for residential leasing. Run the cash-flow model against any non-habitual short-term arrangements before electing — the regime is irrevocable for the contract's duration.
• First-time buyers: Primary-residence purchases at or below €660,982 carry an IMT and partial Imposto do Selo break. Time the deed carefully — the IMT bracket indexes annually, and the relief applies once per beneficiary. A competent notário can structure the escritura around the threshold.
• Renovators: If you bought a property to renovate, plan the work between 25 September 2025 and 31 December 2029 to claim the personal VAT refund. Keep invoices until 31 December 2032 — the claim window is wider than the work window.
• Tenants: Keep the AT-issued recibo de renda and the contract NIF on file. The €900/€1,000 deduction step-up flows automatically through Modelo 3.
• Documentation: Foreign-issued deeds, divorce certificates or inheritance papers used in the chain of title typically need Apostille or consular legalisation before the conservatória will register the transmission.

Final activation is now a matter of days, with the decree expected in the next Diário da República issue.