Article by Raquel Dias - Lawyer at International Atlantic Services

In recent years, housing affordability has become one of the most pressing socio-economic challenges in Portugal. While the country continues to attract international investors and digital nomads, the younger generation faces increasing difficulties in accessing home ownership. Rising real estate prices, limited housing supply, and stricter lending conditions have made the dream of owning a home increasingly distant for many under the age of 35.

Recognizing this generational gap, the Portuguese Government has implemented a series of incentives aimed at facilitating home purchase for young people. These measures form part of a broader national strategy to ensure generational renewal, encourage long-term residency, and promote balanced regional development.

The key legal basis for housing incentives in Portugal is found in the State Budget Laws and the “Mais Habitação” Programme.

In general terms, “young people” are defined for policy purposes as individuals under the age of 35 who are purchasing their first permanent residence in Portugal. To qualify for incentives, applicants must be tax residents in Portugal and cannot already own another residential property within the national territory.

These initiatives aim not only to reduce the financial burden of initial property acquisition but also to encourage long-term settlement in less urbanized regions.

Financial and Tax Incentives

Several fiscal and financial benefits are currently available to support young buyers:

1. IMT (Property Transfer Tax) Relief

Young first-time buyers may benefit from partial or full exemption from the Imposto Municipal sobre Transmissões (IMT) and Imposto do Selo (Stamp Duty), depending on the property’s value:

• For properties valued up to €316,272, buyers aged 35 or younger are fully exempt from both IMT and Stamp Duty.
• For properties valued between €316,272 and €633,453, a partial exemption applies. IMT and Stamp Duty are due only on the portion exceeding €316,272.
• For properties above €633,453, no exemption is available; IMT and Stamp Duty apply to the total value.

2. IMI (Municipal Property Tax) Reduction

Many municipalities grant temporary IMI reductions for up to three years for first-time buyers under 35, particularly for properties located in lower-density areas.

3. Stamp Duty Exemption

In certain cases, the Imposto do Selo on property purchases or mortgage loans can be waived for eligible young buyers, reducing acquisition costs by up to 0.8% of the transaction value.

4. State-Backed Credit Lines and Guarantees

The Government has partnered with financial institutions to provide low-interest mortgage loans and state guarantees for up to 15% of the property’s value, allowing younger borrowers to overcome the challenge of limited savings for down payments.

5. Rent-to-Buy and Cooperative Housing Schemes

These programs allow young residents to rent a property with an option to purchase after a certain period, applying part of the rent toward the final price. Cooperative housing models also offer below-market entry costs and shared ownership structures.

Regional and Local Measures

Municipalities across Portugal have also introduced their own incentives to attract and retain younger populations.

Lisbon offers municipal guarantees and support for housing cooperatives targeting young professionals, while Porto’s “Casa Primeiro” programme facilitates access to affordable financing for first-home acquisitions.

In the Autonomous Regions, the Madeira Regional Government provides a “Jovem Investidor” subsidy for young first-time buyers, covering up to 10% of acquisition costs. In the Azores, the “Programa de Apoio à Aquisição” allows residents under 35 to access subsidised credit lines and reduced notarial fees.

These local initiatives complement national incentives and are often decisive for those seeking to establish roots outside major urban centres.

Practical Steps for Young Buyers

Applicants should ensure:

• Proper proof of age and tax residency;
• Documentation confirming first-time buyer status;
• Updated property registration and energy certification;
• Application through authorised banks or directly via the Portal das Finanças for tax relief.

Engaging qualified legal counsel early in the process can prevent delays and ensure compliance with eligibility conditions, particularly where multiple incentives overlap.

Portugal is consolidating its position as a country that values generational inclusion and residential stability. Through tax relief, subsidised credit, and regional support programmes, young people now have unprecedented opportunities to take their first step onto the property ladder.