New Housing Measures for Young People Approved by the Council of Ministers

Last Thursday, May 23, 2024, several housing measures targeting young people up to 35 years old were approved by the Council of Ministers. According to Prime Minister Luís Montenegro, it is important to "tell young people that it is worth living in Portugal" so that they "do not have to emigrate in search of an opportunity."

But what changes for young people looking for a home?

Housing Measures

Exemption from IMT and IS on the Purchase of the First Home

Young people up to 35 years old will benefit from an exemption from IMT (Municipal Tax on Onerous Property Transfers) and IS (Stamp Duty) on the purchase of their first home, regardless of their income.

  • Full exemption for homes up to €316,272
  • Partial exemption for homes between €316,272 and €633,453 (the component up to €316,272 is exempt, with the remainder subject to IMT and IS).

Since IMT is a municipal revenue tax, the Government also proposes creating a compensation mechanism for municipalities that see their revenues decrease due to this exemption.

This measure will come into effect on August 1, 2024.

"This is a measure aimed at addressing an emergency situation where a young person wants to own a home but cannot. It is a way to support them in purchasing their first home," explained the Minister of Youth and Modernization.

Fees

  • Exemption from fees due for the registration of acquisition, for transfer for consideration between living persons, of property with a taxable patrimonial value up to €316,272.

The measure will be reassessed after 3 years.

Public Guarantee of up to 15% on the Purchase of the First Home

  • Maximum guarantee of 15% of the transaction value for homes up to €450,000.
  • Applicable to young people with incomes up to the 8th IRS bracket (€81,199).

The measure will be regulated by decree within 60 days, with an expected effective date of August 1, 2024.

The decree-law establishing a public guarantee of up to 15% of the transaction value for properties up to €450,000, aimed at facilitating the granting of credit for the first permanent home for young people up to 35 years old, was approved.

Youth IRS with a Maximum Cap of 15% until Age 35

  • Minimum tax rate of 4.4%.
  • Applicable to young people with incomes up to the 8th bracket (€81,199).

The new rules will come into effect on January 1, 2025, and young people can choose whether to maintain the current regime or switch to the new one.

"With this measure, young Portuguese will pay an IRS rate ranging from 4.4% to 15%. Although the maximum rate for the eighth bracket is 15%, the vast majority of young people earn much less than this income level, so they will have a tax rate somewhere between 4.4% and 7% or 8%," clarified Luís Montenegro.

Porta 65 without Maximum Rent Limit

  • Maximum rent limit no longer exists.
  • Applications can be made without a rental contract.
  • Wage slips to be presented will be reduced to three instead of the current six.

Effective from September 1.