Buying Your First Home in Portugal Under 35? What the Proposed 2027 Budget Could Change

Portugal's proposed 2027 State Budget could reduce the upfront costs of buying a first home, with a higher property tax exemption threshold for eligible young buyers.

Buying your first home in Portugal before turning 36? The Government's proposed 2027 State Budget includes changes that could make the purchase less expensive.

One of the main proposals is an increase in the full Property Transfer Tax (IMT) exemption threshold to €338,141 for eligible buyers aged 35 or younger.

The proposal also provides for the continuation of other support measures, including Stamp Duty relief, IRS Jovem and the public mortgage guarantee.

But these benefits are not automatic, and the conditions matter.

Here is what could change in 2027 and what young buyers should consider before purchasing property in Portugal.

Important: These measures form part of the proposed 2027 State Budget. They are subject to parliamentary approval and may change before the final legislation is published.

1. A Higher IMT Exemption Threshold for Young Buyers

IMT (Imposto Municipal sobre as Transmissões Onerosas de Imóveis) is the Portuguese Property Transfer Tax generally payable when purchasing real estate.

Under the existing IMT Jovem regime, eligible buyers aged 35 or younger can benefit from a full or partial exemption when purchasing their first home for their own permanent residence.

For 2027, the Government proposes increasing the full exemption threshold from €330,539 to €338,141, and the upper limit for partial relief from €660,982 to €676,185.

If approved, eligible buyers purchasing a property within the new threshold could benefit from a full IMT exemption.

For qualifying properties above that amount and up to €676,185 (€660,982 in 2026), only the part of the value above the full-exemption threshold is taxed, at 8%. Above that upper limit, the exemption is lost entirely and the standard rates apply.

What Would This Mean in Practice?

Consider a 30-year-old purchasing their first home in Portugal for €335,000.

Under the 2026 thresholds, this property exceeds the limit for a full IMT exemption.

Under the proposed 2027 threshold of €338,141, the same property could fall within the full exemption range, provided all other eligibility requirements are met.

For buyers considering properties close to the existing threshold, this change could make a difference to their acquisition costs.

However, the amount of tax saved depends on the property's taxable value and the buyer's individual circumstances. In this example the saving would be modest: under the 2026 rules, the buyer would pay 8% only on the €4,461 above the threshold, which is about €357 in IMT, plus around €36 in Stamp Duty.

2. Stamp Duty Relief for First-Time Buyers

IMT is not the only tax associated with buying property in Portugal.

Property acquisitions are also generally subject to Stamp Duty (Imposto do Selo), normally calculated at 0.8% of the relevant taxable purchase value.

Under the existing rules, eligible young buyers purchasing their first permanent home may also benefit from Stamp Duty relief on the same terms: a full exemption up to the IMT Jovem threshold and partial relief up to the upper limit.

The proposed 2027 Budget maintains this support, alongside the IMT Jovem regime.

The exemption is subject to specific legal requirements, including the buyer's eligibility and the property's value.

It is also important to distinguish Stamp Duty on the property purchase from Stamp Duty associated with mortgage financing, which follows separate rules.

For buyers who qualify, these tax benefits can reduce the amount needed to complete a property purchase.

3. Who Can Qualify for IMT Jovem?

IMT Jovem is intended to support eligible young people purchasing their first home for their own permanent residence in Portugal.

Under the existing framework, several conditions must be considered.

Age

Buyers must be 35 years old or younger at the time of acquisition.

First Home

Buyers must not own, or have owned at any time in the three years before the purchase, an urban residential property, including a share in one.

Permanent Residence

The property must be intended for the buyer's own permanent residence, rather than being purchased solely as a holiday home or investment property. It must become the buyer's permanent home within six months and remain so for six years, otherwise the exemption may be withdrawn.

Tax Situation

Eligibility also depends on the buyer's individual tax circumstances: in particular, the buyer must not be claimed as a dependant for income tax purposes in the year of purchase.

Property Value

The level of exemption depends on the property's taxable value and the applicable thresholds.

Can Foreign Buyers Qualify?

Potentially, yes.

The IMT Jovem regime is not limited exclusively to Portuguese nationals.

Foreign buyers who meet the relevant legal requirements may also qualify.

However, buyers relocating to Portugal should understand that tax residency and legal residency are separate concepts.

Obtaining a Portuguese residence permit does not automatically mean that a person is registered as a Portuguese tax resident. This matters because a buyer who is not tax resident at the time of purchase is subject to the flat 7.5% IMT rate for non-residents, which excludes any exemption, including IMT Jovem.

4. Will Portugal Continue the Public Mortgage Guarantee?

Another measure included in the Government's 2027 Budget proposal is the continuation of the public mortgage guarantee for eligible young buyers.

This programme was introduced to help address one of the main challenges facing first-time buyers: the deposit required to purchase a home.

Under the existing framework, qualifying buyers aged between 18 and 35 may be able to obtain mortgage financing covering up to 100% of the eligible property value, with part of the loan supported by a State guarantee.

The public guarantee may cover up to 15% of the initial mortgage amount, subject to the programme's conditions. These include having tax residence in Portugal, an income limit and a cap on the property's value.

However, this does not mean that mortgage approval is automatic.

Banks must still assess the buyer's financial situation, income, creditworthiness and ability to repay the loan.

Does This Mean You Can Buy Without Savings?

Not necessarily.

Even if a bank agrees to finance the full eligible property value, buyers may still need to cover additional expenses, such as legal fees, property valuations, registration costs and insurance.

The guarantee also does not mean that the State pays part of the property price.

It is a mechanism designed to support access to mortgage financing.

The Government's proposal indicates that this support is expected to continue, although the final arrangements will depend on the approved measures and applicable programme rules.

5. IRS Jovem Is Also Expected to Continue in 2027

The proposed State Budget does not focus exclusively on property purchases.

It also maintains IRS Jovem, Portugal's income tax relief regime for eligible young workers.

While IMT Jovem provides tax relief when purchasing a first home, IRS Jovem concerns Personal Income Tax on qualifying employment and self-employment income.

Under the existing regime, eligible individuals aged 35 or younger may benefit from partial income tax exemptions for up to 10 years, subject to statutory conditions and limits.

The level of exemption generally decreases over the years of eligibility. It starts at 100% in the first year and falls to 25% in years eight to ten, subject to an annual cap.

However, being under 35 does not automatically mean someone qualifies.

Eligibility depends on factors such as the type of income, previous years of earning income and the applicable legal requirements.

For young professionals moving to Portugal, it is important to assess both regimes separately, as eligibility for one does not automatically establish eligibility for the other.

6. What Does the Proposed Budget Mean for International Buyers?

For young international residents planning to settle in Portugal, these measures may help reduce the initial costs of home ownership.

However, buying property before moving to Portugal can raise additional questions.

For example, a buyer may be considering purchasing a property while still living abroad, before obtaining a residence permit or establishing Portuguese tax residency.

The requirements for purchasing property, qualifying for IMT Jovem and accessing the public mortgage guarantee are not identical.

Previous ownership of residential property, the intended use of the new home and the timing of the acquisition can all be relevant.

Tax residency may also have broader implications beyond the property purchase.

Portuguese tax residents are generally subject to taxation on worldwide income, subject to applicable domestic legislation and international tax treaties.

Understanding these rules before committing to a purchase can help avoid unexpected costs or assumptions about eligibility.

7. When Could the New IMT Jovem Threshold Apply?

The Portuguese Government presented its proposed State Budget for 2027 in October 2026.

The proposal must still complete the parliamentary approval process. If approved, the new limits are expected to apply from 1 January 2027.

This means that the proposed increase to €338,141 is not yet an approved change to the law.

For buyers planning a purchase in late 2026 or early 2027, the distinction is particularly important.

The IMT rules and thresholds applicable to a transaction will depend on the legislation in force at the relevant time.

A proposed tax benefit should therefore not be treated as guaranteed when calculating a property's total purchase costs.

8. What Should You Check Before Buying Your First Home in Portugal?

If you are aged 35 or younger and planning to buy property in Portugal, there are several questions worth addressing before committing to a purchase:

1. Do you meet the age requirements? Confirm your eligibility at the expected date of acquisition.
2. Have you owned residential property before? Previous ownership may affect whether you qualify.
3. Will this be your permanent home? The intended use of the property is an important eligibility condition.
4. Does the property fall within the applicable IMT threshold? Make sure you use the limits legally in force at the time of purchase.
5. Could you qualify for the public mortgage guarantee? Check both the programme requirements and the bank's lending conditions.
6. What other costs will you need to cover? Even where tax relief applies, legal, financing and registration expenses may remain.

Buyers should also consider the legal implications of signing a promissory purchase and sale agreement (Contrato-Promessa de Compra e Venda, or CPCV) before confirming their tax and financing position.

Frequently Asked Questions About IMT Jovem 2027

Is the €338,141 IMT exemption already in force?

No. As of October 2026, the €338,141 threshold is part of the Government's proposed 2027 State Budget and is subject to parliamentary approval.

Can foreigners benefit from IMT Jovem?

Potentially, yes. The exemption is not based exclusively on Portuguese nationality. Foreign buyers must meet the relevant legal conditions.

Can I qualify if the property costs more than €338,141?

Potentially. Under the proposal, properties between €338,141 and €676,185 would benefit from partial relief: only the part of the value above €338,141 would be taxed, at 8%. Above €676,185, the standard rates apply.

Does IMT Jovem apply to holiday homes?

The regime is intended for qualifying purchases of a first home for the buyer's own permanent residence. A property purchased solely as a holiday home would not generally meet this requirement.

Can I benefit from both IMT Jovem and IRS Jovem?

Potentially, yes. These are separate tax regimes with different eligibility requirements. Qualifying for one does not automatically mean qualifying for the other.

Does the public mortgage guarantee cover the full property price?

The programme may allow eligible buyers to obtain financing of up to 100% of the relevant property value, subject to bank approval and programme conditions. It does not guarantee that every applicant will receive full financing.

Final Thoughts

Portugal's proposed 2027 State Budget maintains several measures intended to support younger people purchasing their first home.

The proposed increase in the full IMT Jovem exemption threshold to €338,141 could provide additional tax relief for eligible buyers, particularly those purchasing properties close to the current limit.

The expected continuation of Stamp Duty relief, IRS Jovem and the public mortgage guarantee may also remain relevant for young residents and people planning to move to Portugal.

However, each measure has its own eligibility requirements, and the 2027 Budget has not yet completed the legislative process.

For anyone planning to purchase their first home in Portugal, understanding the applicable tax rules, financing conditions and timing of the transaction is an important part of preparing for the purchase.

This article reflects the proposed Portuguese State Budget for 2027 as presented in October 2026. The proposed measures may change before final approval and publication.