Portugal Plans Higher Property Taxes for Foreign Buyers Amid Housing Crisis

Portugal's government, led by Prime Minister Luis Montenegro, announced plans to increase the Municipal Property Transfer Tax (IMT) on house purchases by non-resident foreign buyers to address the country's housing affordability crisis. This move targets curbing rising foreign demand, which has driven up property prices, with non-Europeans paying nearly double what locals pay on average. Alongside the tax increase, the government is implementing multiple measures to boost affordable housing supply, including building more homes, offering affordable rental options, expediting construction permits, and providing tax incentives for young buyers. Additional efforts include exemptions from certain property taxes for homes rented up to €2,300, increased IRS deductions for rent, reduced taxes for landlords charging moderate rents, and lower VAT rates for housing construction and rentals. The government is also collaborating with banks to develop more flexible housing loan products, signaling a comprehensive approach to tackling the housing shortage. These policies reflect a broader regional trend, as neighboring Spain has also considered doubling taxes on foreign property buyers to ease similar pressures.