The New Housing Tax Package: Between Tax Incentives and Proof of Compliance

Decree-Law No. 97/2026 of 20 May should not be viewed merely as another package of tax incentives for the real estate sector. Its rationale is broader: it seeks to shift taxation from a purely revenue-raising function towards a public policy instrument, using the tax system to guide housing supply.

The underlying idea is straightforward: to grant tax incentives to those who build, rehabilitate, acquire or make residential properties available for housing purposes, particularly where moderate prices or affordable rents are involved. The implementation, however, is less straightforward. Access to these benefits depends on economic criteria, statutory deadlines, residential use requirements, administrative notifications and documentary evidence.

Accordingly, the key question is not simply whether a tax incentive exists. The decisive issue is whether the transaction can comply—and demonstrate compliance—with the legal requirements throughout the relevant period.

1. A Reform Based on Conditional Tax Incentives

The Decree-Law follows a common legislative structure: it identifies eligible transactions, associates them with tax benefits, and makes the continued availability of those benefits subject to compliance with both substantive and procedural requirements.

The measures cover, among others, Property Transfer Tax (IMT), Stamp Duty, VAT, Personal Income Tax (IRS), Corporate Income Tax (IRC), Municipal Property Tax (IMI), Additional Municipal Property Tax (AIMI) and the Tax Benefits Code (Estatuto dos Benefícios Fiscais).

However, the framework is not based on the automatic granting of tax advantages. On the contrary, it adopts a system of conditional tax relief: tax reductions are available only where the transaction is genuinely connected with the promotion or provision of housing under economically defined conditions.

This is a significant change. Tax benefits no longer depend solely on the abstract nature of the property, but also on its economic function: purchase price, rent, duration, intended use, actual use and the ability to substantiate compliance.

2. The First Filter: Moderate Purchase Price and Affordable Rent

The concepts of moderate purchase price and affordable rent serve as the gateway to several of the new tax regimes.

For 2026, an affordable rent corresponds to 2.5 times the statutory monthly minimum wage applicable for that year. Considering the minimum monthly wage of €920.00, the reference threshold is €2,300.00 per month.

As for the moderate purchase price, the Decree-Law refers to the upper limit of the second IMT bracket applicable to the acquisition of a primary and permanent residence. In 2026, that threshold is €660,982.00.

These figures should not be regarded as merely indicative. They are eligibility criteria. Whenever a tax benefit depends on a moderate purchase price or affordable rent, compliance must be verified as of the date of the transaction, taking into account any legislative or regulatory updates in force at that time.

3. The Overall Economic Substance of the Transaction

One of the most significant aspects of Decree-Law No. 97/2026 lies in the way the legislator assesses the economic value of a transaction.

For the purposes of determining whether the purchase price or rent falls within the statutory thresholds, it is not sufficient to consider only the amount stated in the principal contract. The entire economic substance of the transaction must be taken into account, including amounts relating to movable assets, equipment, ancillary components, services or associated obligations, even where these are documented under separate agreements.

This rule has a clear anti-abuse purpose. It is designed to prevent transactions from being formally presented as falling within the legal thresholds when, in reality, part of the purchase price or rent has been shifted to parallel agreements.

For example, if the declared monthly rent is €2,200.00, but the tenant is also required to pay €150.00 for parking and €100.00 for mandatory furniture or equipment, the relevant economic value may amount to €2,450.00. In such circumstances, the transaction may cease to satisfy the affordable rent requirement.

The practical consequence is clear: the contractual structure must accurately reflect the economic reality of the transaction. It is not enough for the principal contract alone to comply with the statutory limit; the transaction as a whole must remain within the applicable threshold.