2026 is a big year for housing in Portugal. The government has approved a suite of changes affecting renters owners landlords buyers and builders. These changes are part of a broader push to increase housing supply, make rents fairer and boost access for families and internationals moving or investing here. Below is a clear breakdown of all the major measures that are now in force or set to apply in 2026 and why they matter to you. 

1. Bigger Tax Breaks for Tenants

If you rent at what Portugal defines as a moderate price you can deduct up to €900 of your rent from your income tax (IRS) in 2026. That rises to €1,000 in 2027. This applies to leases classified as “moderate,” generally up to €2,300 per month. That puts more money back in your pocket. 

2. Lower Tax Rates for Landlords on Moderate Rents

Landlords who rent properties at moderate rents benefit from a cut in the autonomous IRS rate on rental income to about 10 percent instead of the previous roughly 25 percent. That makes long-term rentals more attractive. 

3. Exemptions from Property Taxes (AIMI)

Properties rented at these moderate rent levels are exempt from the Additional Municipal Property Tax (AIMI) that often hits owners of multiple homes. That reduces holding costs and can encourage more supply in the long-term rental market. 

4. Reduced VAT on Housing Construction and Renovation

New housing built for sale up to a price of around €648,000 and properties intended for rental at moderate rents are eligible for a reduced VAT rate of 6 percent instead of the standard 23 percent. This applies until at least 2029 and can lower development costs. 

5. Higher Property Transfer Tax (IMT) for Non-Resident Buyers

Non-residents buying residential property now face a flat Municipal Property Transfer Tax (IMT) of 7.5 percent. There are exemptions or refunds if the buyer becomes a Portuguese tax resident quickly or the property is rented at moderate rates. This aims to make homeownership fairer while still welcoming investment. 

6. Continued Support for Young First-Time Buyers

Portugal’s existing tax exemption for property transfer tax on first homes for buyers under 35 remains significant in 2026, helping young people enter the market by cutting upfront costs on eligible properties. 

7. Rent Update Formula for 2026

Annual rent adjustments follow the official inflation-linked index. For 2026 this is about 2.24 percent, meaning if you’re adjusting rents, you must notify tenants in writing and follow the legal update process. 

8. Simplified Permits and Construction Regulatory Changes

The old general building code (RGEU) is set to be replaced by a unified Construction Code by mid-2026, simplifying technical requirements. Digital platforms for urban licensing are also becoming mandatory, cutting red tape and speeding up housing development. 

9. Broader Housing Supply Initiatives

Beyond the fiscal side there are ongoing measures to unlock underused public buildings for housing and to support public-private schemes that build rental homes at controlled prices. These aim to add more units to the market over time. 

What This Means If You’re Planning a Move?

If you’re moving to Portugal in 2026 or investing here this isn’t just about taxes. These changes influence how much your rent costs your budget how much tax you pay on rental income or property purchases and what incentives developers and landlords must bring more homes to market. Even if you’re focused on lifestyle or relocation the broader goal is clearer more accessible housing for residents and internationals alike.