Portugal to Raise Youth IMT Exemption Threshold to €330,500 in 2026 Budget
The Portuguese government has included a proposal in the State Budget for 2026 (OE2026) to update the brackets for the Municipal Property Transfer Tax (IMT) for individuals up to 35 years of age. The measure provides for a 2% increase in the exemption limit, which will rise from the current €324,058 to €330,500, an effective increase of €6,500. This legislative adjustment is designed to support younger buyers in acquiring their first primary residence.
According to the official proposal document submitted to Parliament, the subsequent tax bracket under the 'IMT Jovem' program will also be adjusted. The upper limit of the bracket, which is taxed at a rate of 8%, will increase from €648,022 to €660,982. This means that for a property acquisition by a qualifying young buyer, the portion of the value up to €330,500 will be fully exempt from both IMT and the associated Stamp Duty (Imposto de Selo). For values exceeding this, the marginal tax rates will apply. Understanding these nuances is crucial, and guidance can be found by exploring the financial concerns in property acquisition.
The document further specifies that for a hypothetical purchase of a €600,000 home, a young buyer would benefit from the full exemption on the initial €330,539 and then pay an 8% tax on the amount between that threshold and the final purchase price. This represents a significant fiscal incentive aimed at improving housing accessibility for younger demographics. For those needing help with the tax implications, connecting with property tax accountants is advisable.
The State Budget for 2026 also contains provisions for buyers over the age of 35. It establishes an IMT exemption for the purchase of a home up to a value of €106,346. This figure is an update from the previous limit of €104,261. Additionally, the proposal confirms that the transfer of rustic properties will remain fully exempt from both IMT and Stamp Duty, a measure intended to support rural land transactions.
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The 'IMT Jovem' incentive was originally implemented on August 1, 2024, as part of a broader government package to address housing challenges. The stated goal was to foster financial independence and reduce the upfront costs associated with property acquisition for the younger population. This latest update continues that policy direction.
This budget is the second to be prepared by the current financial administration, which has publicly stated its goal of maintaining a straightforward fiscal plan, free of extraneous 'budgetary riders,' to facilitate its passage in Parliament. The timeline for approval indicates that the general debate on the budget will occur on October 27 and 28. The final and global vote on the OE2026 is scheduled for November 27.
The formalization of these tax benefits provides a clearer financial landscape for prospective homebuyers planning their investments for the upcoming year. The adjustments reflect an acknowledgment of prevailing property values and are structured to provide tangible relief to buyers. For foreign nationals, understanding these regulations is key, and consulting with English-speaking real estate agents can streamline the process. Navigate Portuguese property regulations with expert guidance at realestate-lisbon.com.