The Government approved one of the most significant housing tax packages in recent years - the “fiscal shock for housing”. Law No. 9-A/2026 gave the authorisation and Decree-Law No. 97/2026 of 20 May enacted the measures, already in force (some only take effect later in 2026). If you’re a freelancer who owns property, rents out a flat, or simply pays rent, there are measures here that affect you directly.
The Decree-Law No. 97/2026 is now published and in force - but each benefit has its own conditions and deadlines, so check your case before counting on it.
What “moderate price” means — and why it matters
Before getting into the numbers, you need to understand one key concept: moderate price (preço moderado). This is the threshold the government created to ensure that tax benefits apply to affordable housing, not luxury villas.
In 2026 there are two distinct limits, for distinct measures:
- Purchase/construction: a (sale) price up to €660,982 (the top of the 2nd IMT bracket) - this is what counts for the 6% VAT on a sale for a permanent home.
- Letting: a monthly rent up to €2,300 (2.5 times the minimum wage of €920) - this is what counts for the 10% IRS on rent and for the 6% VAT on letting.
It isn’t a single test: the price limit doesn’t govern rents, nor does the rent limit govern construction. The value compared against the limit is the total of the operation (you can’t split it artificially) and the limits can be updated by ministerial order. And each benefit also has its own conditions, dates and evidence - check your case before counting on it.
Measure 1: Construction VAT drops from 23% to 6%
This is the most talked-about measure and it’s genuinely significant if you’re planning to build or rehabilitate housing.
The reduced 6% rate (verba 2.42.1; the mainland rate - the Azores and Madeira have their own rates) applies to construction or rehabilitation works on properties intended for sale for the buyer’s own permanent home or exclusively for residential letting - with their own cumulative conditions (art. 10.º of DL 97/2026): for example, selling or granting the first lease within 24 months of the occupancy documentation and, for letting, keeping the property let for at least 36 months over the first 5 years. The limit depends on the purpose: a sale price up to €660,982 (sale) or a monthly rent up to €2,300 (letting). So it isn’t an automatic 6% on works on your own home - for those commissioning the construction of their own permanent home there’s a separate refund scheme (see below).
What changes in practice on an empreitada covered by the reduced rate (works that were at 23% and now meet the conditions - some rehabilitation already had a reduced rate before):
- An empreitada of €20,000: at 23% that was €4,600 in VAT, at 6% it’s €1,200
- Construction of €100,000: at 23% that was €23,000 in VAT, at 6% it’s €6,000
How the works qualify - the conditions that determine the reduced rate (an express mention in the acquisition title, communication of the contracts, co-ownership cases), what falls under the rate and how materials are treated - has its own rules. Confirm it with your contractor and accountant before assuming 6% across the whole invoice.
Important: If you commissioned the construction of your own permanent home through a construction empreitada (outside any business activity), you can claim a partial refund of the VAT borne, bringing it closer to the 6% rate - if you meet the conditions: the value (the registered patrimonial value, or the land acquisition value plus construction costs excluding VAT, whichever is higher) must be within the moderate-price limit, and you must assign the property to your own permanent home within 6 months of the start-of-use documentation, keeping it so for at least 12 months. Only VAT on invoiced empreitadas counts (chargeable by 31 December 2032) - the mere purchase of materials is not eligible. The request is submitted electronically within 12 months of that documentation (for the first three quarters of 2026, requests open on 1 October 2026, with the 12 months counted from that date), and the tax authority has up to 150 days to process it from a duly completed request. Keep all empreitada invoices with your NIF.
Measure 2: IRS on rental income drops from 25% to 10%
If you’re a freelancer who owns a flat you rent out, this measure changes your calculations significantly.
Rental income (Category F in IRS) was taxed at the general autonomous rate of 25%. Under the new package, that rate falls to 10% (with effect from 1 January 2026) — for residential letting with rent within the ceiling (€2,300/month in 2026, 2.5× the minimum wage), provided you meet the regime’s conditions (residential use, disclosure to the tax authority). Note: if you already have a long-duration contract with a rate below 10%, you keep the more favourable one. In the figures below, for simplicity, we assume no deductible expenses: Category F is taxed on net rent, so the real tax can be lower.
What changes in practice:
- You receive €800/month in rent (€9,600/year)
- Previously: you paid €2,400 in IRS on that income
- Now: you pay €960 — a saving of €1,440 per year
This reduction applies to income received up to 31 December 2029.
Miguel, a freelance designer in Lisbon, has an inherited flat he rents out for €900/month. Under the previous regime he paid €2,700/year in IRS on the rent. With the new 10% rate, he’ll pay €1,080. That’s a difference of €1,620 per year — provided the letting meets the regime’s conditions (residential use, rent within the ceiling).
Measure 3: Higher deduction for tenants
If you’re the tenant — and many freelancers rent — there’s an improvement for you too.
The IRS deduction limit for rent payments increases:
- €900 in 2026 (was €700)
- €1,000 from 2027 onwards
In practice, the deduction ceiling rises by €200 in 2026 (and a further €100 in 2027) - it’s not a guaranteed refund (what you actually deduct depends on the statutory percentage and your tax), but the limit stops holding you back so soon.
Measure 4: IMT changes for housing
We highlight two relevant IMT changes (the municipal property transfer tax) - the package has others:
- A 7.5% rate for non-residents: when buying a property intended exclusively for housing, if the buyer is a non-resident, a flat 7.5% applies (no exemptions or reductions) - unless they have been considered a tax resident in Portugal (under art. 16.º of the CIRS), become resident within 2 years of the purchase, or assign the property to residential letting within the limits (let within 6 months and for at least 36 months over the first 5 years). In these last two cases, you pay the 7.5% and then request the difference back, within 6 months of becoming resident or signing the lease (art. 17.º(10)-(12) of the IMT Code).
- A 10% surcharge if you don’t use it as your permanent home: if you buy a property whose empreitada benefited from the 6% rate and don’t assign it to your permanent residence within 6 months (or stop doing so within the following 12 months), a 10% surcharge on the IMT taxable value applies, with exceptions for exceptional circumstances (for example, marriage or civil union and its dissolution, or an increase in the number of dependants).
The rules vary with the situation, so check your case.
When it applies from
Decree-Law No. 97/2026 is now published and in force. What varies case by case are the conditions and dates of each benefit - the 10% IRS on rent, for example, applies to income received up to 31 December 2029. The VAT rules take effect from the quarter after entry into force and apply to empreitadas whose administrative procedure (licence application, prior communication, prior opinion or notice of the start of works) begins between 25 September 2025 and 31 December 2029, with the VAT becoming due from 1 January 2026. For empreitadas that already meet these conditions, the regime can be brought forward to 1 January 2026 by a joint election of the provider and the client (it doesn’t waive the remaining conditions). For works straddling these dates, check with your accountant.
What you should do now:
- If you’re planning construction works, confirm with your contractor that they qualify for the 6% rate (and how materials are treated)
- If you rent out a property, confirm it’s residential and the rent is within the regime’s ceiling, to benefit from the 10% rate
- Keep all documentation of property values — you’ll need to prove the “moderate price” threshold is met
How this relates to your freelance accounts
If you have rental income, it is declared on Annex F of the annual IRS declaration — separate from your self-employment income (Category B). These are two different things and must be handled separately.
Inês, a freelance consultant in Porto, has her activity registered under the simplified regime and rents out a room in her flat. She has two fiscal “hats”: Category B (consultancy) and Category F (room rent). With FIZ, she manages Category B automatically. For Category F, rental records and the annual declaration also need to be in order — it’s important not to mix the two.
Important: The 10% IRS on rental income is not the same as the taxation of your self-employment activity. These are separate rates applied to different types of income. If you consolidate rental income with your business income for tax purposes, it may end up costing more — always calculate both options before submitting your IRS declaration.
✅ In summary
- VAT on housing construction/rehabilitation drops to 6% — for works on properties intended for sale for the buyer’s permanent home or exclusively for residential letting (sale price up to €660,982 or rent up to €2,300/month), subject to the conditions of DL 97/2026. For those commissioning their own home’s construction there’s a separate refund scheme.
- IRS on rental income falls from 25% to 10% — for residential letting with rent up to €2,300/month (2026 ceiling), for income received up to 31 December 2029. A real saving for freelancers who rent out properties.
- Rental income must be correctly declared in IRS — separately from self-employment income. With FIZ.co you handle Category B automatically; for Category F, keep your rental records organised so the annual declaration holds no surprises.
