Portugal Proposes 10-Year Property Tax Holiday for First Homes
Foreign investors and expats considering their first property purchase in Portugal should pay close attention to a new legislative proposal that could offer massive tax savings. A plan, initiated in Madeira and now under consideration by the national government, aims to create a 10-year exemption from the annual Municipal Property Tax (IMI) for first-time buyers of a primary residence.
This proposal, if enacted, would dramatically reduce the cost of homeownership across Portugal, including in key investment hubs like Lisbon and Porto. The IMI is a significant annual expense, and a decade-long holiday represents a substantial financial incentive.
What Foreign Investors Need to Know'This is a potential game-changer for the market,' states a real estate consultant in Lisbon. 'For a foreign buyer looking to establish a primary residence here, this removes a major long-term cost from the equation, directly boosting the investment's appeal.' The proposal also includes lowering the VAT on construction for first homes and slashing capital gains tax for sellers, which could invigorate the entire market.
Actionable Steps for Today's Buyer- Monitor Legislation: While not yet law, this proposal's progress through the Assembly of the Republic is a key development to watch. Its passage would create an immediate and significant buying opportunity.
- Assess Eligibility: If the law passes, it will likely apply to individuals purchasing their first 'habitação própria permanente' (permanent own home). Investors should consult with legal experts to see how they might qualify.
- Prepare Your Finances: A reduction in long-term tax liability could alter your investment calculations, potentially allowing for a larger budget or making a previously borderline investment highly profitable.
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