“Government tax shock”? Can be “captured” by landlords

Para the researcher in the area of housing, the success of the “tax shock” package of the government will depend on the “increase of the supply of houses” in the market and the reduction of the prices of the accommodation, both in the sale and in the rental.

“More house offers would not only lower prices but lead to more real estate transactions”, explained.

If this does not happen, “the tax benefits will be captured by landlords and will not be transmitted to tenants who were the beneficiaries and recipients of this public policy,” says the university professor.

Considering that it is early to assess the effectiveness of the Build Portugal package, Vera Gouveia Barros argues: “the value of the last transactions and of the last lease contracts [published by the INE] gives us very, very little information. More data are needed”.

In the second quarter of the year, house prices, although they began to slow down, rose 16.5% compared to last year's homologous period, and the number of real estate transactions fell by 6.4%, in a trend that has been repeated for three quarters.

The first set of measures of the government housing package, of a fiscal nature, was announced on 25 September 2025, but it went through a lengthy legislative process and only entered into force last May.

Among other measures, it reduced from 25% to 10% the rate of IRS of landlords, regardless of the longer or shorter duration of contracts, exempt from taxation on capital gains the sale of dwellings in the event of reinvestment in new properties intended for lease to “moderate values” of up to EUR 2,300 monthly, and reduced the rate of VAT from 23% to 6% in the construction of buildings intended for sale or lease for permanent housing, to EUR 2,300 in the case of lease and EUR 660,982 in the case of sale.

This first legislative package was followed by new announcements to increase the supply of homes, allowing a single heir to unlock an undivided inheritance after two years of impasse (awaiting publication), faster evictions, the creation of an Housing Emergency Fund to support “families in impending loss of housing”, the end of the 2% increase brake on new leases and the partial thawing of contracts prior to 1990 (awaiting to be discussed in parliament).

Regarding the tax measures launched a year ago, the economist is critical of the general way in which taxation on leases was reduced.

“By applying a below-normal rate [10% instead of 25%] on rents of up to 2,300 euros per month, we are giving a tax benefit equal to all landlords, when these 2,300 euros mean very different things depending on the area or characteristics of the property,” he explains.

On the limit, “if I rent a villa in Restelo for 2,400 euros, I am not entitled to any tax benefit. But if you rent a T1 in the Damaia for 2,200 euros, I already have it. This makes no sense”.

The researcher also does not agree that the exemption on the taxation of capital gains has not been limited to own and permanent housing.

“ Let's imagine someone sells one house to buy another for vacation in the Algarve. Since it does not have to be a permanent dwelling, it does not have to prove that it lives there and very easily makes a lease to a child for a small amount, which is not to have to pay too many taxes, and thus manages to be exempt from taxation on capital gains”.

In addition to criticizing the measure, the economist considered it unfair in relation to those who chose to sell a house they inherited, to buy a house to effectively inhabit, “but must pay added value”.

He also regretted that the rent of rooms was excluded from the “tax shock” of the government when, in the center of cities such as Lisbon and Porto, much sought by students, “the houses are very large, with five divisions or more”.

It also considered that tax incentives do not in themselves solve the problem of empty dwellings because the costs of works are large and the permits are lengthy and complex.

“ We should try to understand why a measure such as the worsening of IMI on returns, which has existed since the time of Manuela Ferreira Leite in the Ministry of Finance, does not work,” he said.

He insisted on the lack of available data to characterize the housing sector, data that are in the possession of the tax - such as the ‘stock’ of lease contracts, the duration, the number of renovations, the value of rents and that of their annual update.

“I liked to have administrative data about the lease, but also about incomes, to understand what the effort rate is, the composition of the household and all the fundamental information to conceive and evaluate public policies,” he explained.

This information, combined with sector monitoring, would also be useful for evaluating the policies of previous governments “and realizing what was effective, what should be maintained, whether a measure has to be adapted – this is true for housing and not only.”.

According to Vera Gouveia Barros, “the policy of this government, but also of the previous one, is that some measures are being taken, now here, now there, instead of waiting and launching a package of integrated measures, thought together, with data, with information”.