Unlocking Opportunities: Tax Exemptions for First-Time Home Buyers Under 35 in Portugal
- mouniamikou
- 19 sept. 2024
- 3 min de lecture
Portugal has become a premier destination for young individuals eager to establish their roots.
A significant advantage for first-time home buyers under 35 is the range of tax incentives available to them, particularly the exemptions on the IMT (Imposto Municipal sobre Transmissões Onerosas de Imóveis) and IS (Imposto do Selo).
To understand the classic taxation of real estate acquisition, click here.
Summary : This article will explore these tax benefits, eligibility criteria, and how they can facilitate homeownership for young buyers, regardless of their nationality.
This guide will delve into :
1. What is the purpose?
In order to respond to the housing difficulties and rising costs, the Portuguese government has implemented tax incentives to support young adults in achieving homeownership.
2. Key Eligibility Criteria regarding the buyer
If you’re 35 years old or younger and considering purchasing your first home in Portugal, you may be eligible for substantial tax benefits.
To benefit from these tax exemptions:
You must be under 35 years old at the time of acquiring the property.
You should not have owned any residential property in the past three years.
3. Key Eligibility Criteria regarding the property
Three important conditions apply to the property for it to benefit from the tax exemption.
Maximum value : Eligible buyers can benefit from the tax exemption if the property is valued up to €633,453.
Date of acquisition : The exemption applies to all acquisitions that occur from August 1, 2024, onwards. Hence, if the property was bought before August 1, 2024, the exemption does not apply.
Primary residence : The property must be intended for your primary residence, thus encouraging homeownership rather than investment or rental purposes.
4. Tax Exemptions (IMT and IS)
If the buyer and the property meet all the required conditions, the tax exemptions applies Municipal Tax on Property Transfer and Stamp Duty totally applies up to €316,772.
This means that, if that for properties priced between €316,772 and €633,453, buyers are entitled to an exemption on the first €316,772, with IMT and IS due only on the amount exceeding this threshold.
Please, remember that, no exemption applies for properties valued over €633,453.
5. Application Process for Tax Exemptions
To take advantage of these tax benefits, you will need to submit the required documents to the tax authority in order to request exemptions on IMT and IS at the time of issuing the "guias."
To better understand the steps of the acquisition process in Portugal, read this article.
6. Important Considerations
Here are some considerations, based on the frequently asked questions to the Tax Authority ⬇️
Retroactive Exemptions: The IMT and IS exemptions are not retroactive. They only apply to transactions that occur from August 1, 2024, onwards.
Ownership Restrictions: If you already own part of a residential property, even inherited, you will not qualify for the exemptions.
Impact on Couples: If one partner in a couple already owns property, the exemption will only apply to the part being acquired by the eligible partner.
7. Financial impact
The exemption provides significant savings, potentially up to 4.5% of the purchase price for eligible buyers.
Conclusion
The new tax exemptions for young adults buying their first home in Portugal aim to make homeownership more accessible.
By reducing taxes like IMT and stamp duty, the government hopes to increase purchases by people under 35.
However, this could push prices higher if housing supply doesn’t meet the growing demand. While the measure benefits young buyers, it may favor those with financial support.
To complement this, another initiative offers a public guarantee on mortgages—covering up to 15% of a property’s value for homes up to €450,000, helping buyers with incomes up to €81,199.
If you are considering buying your first home in Portugal, reach out for specialized legal advice to navigate the buying process effectively and take full advantage of these valuable tax exemptions. You can also drop me an email.
Mounia
Source : Decree-Law no. 48-D/2024, which took effect on July 31, 2024
External link : Frequently Asked Questions - Government website