Portugal's New Tax Incentives Boost Lisbon Property Investments

Portugal Rolls Out New Tax Benefits for Property Investors

The Portuguese government has introduced a comprehensive package of tax incentives aimed at revitalizing the real estate investment sector, particularly in Lisbon and Porto. These measures, effective from October 1, 2024, are designed to attract international investment while addressing local housing needs.

Key Tax Incentives

Reduced Capital Gains Tax: International investors can now benefit from a reduced capital gains tax rate of 10% (down from 28%) on properties held for more than 3 years, provided they contribute to affordable housing stock.

Rental Income Tax Relief: Property owners who rent to long-term tenants (minimum 5-year leases) will receive a 50% reduction in rental income tax for the first three years.

Market Response

The response from international investors has been overwhelmingly positive:

Inquiry Surge: Leading Portuguese real estate agencies report a 340% increase in international inquiries since the announcement, with particularly strong interest from UK, German, and Brazilian investors.

Price Stabilization: Lisbon property prices, which had been declining by 3-5% annually, have begun to stabilize. Prime areas like Chiado and Príncipe Real are showing early signs of recovery.

Investment Opportunities

Experts highlight several promising investment areas:

• Marvila District: Emerging neighborhood with excellent growth potential
• Santos Design District: Creative hub attracting young professionals
• Lumiar: Affordable area with strong rental demand

Projected Impact: The Portuguese Real Estate Association estimates these incentives could attract €2.5 billion in foreign investment over the next two years, creating approximately 8,000 new jobs in the construction and real estate sectors.