Updated: May 2, 2024


The Portuguese government has taken steps that will make it easier for young people to purchase their first home in Portugal. This is a welcome development in light of increasing housing prices making it difficult for young buyers to buy a home in in Portugal and get their feet on the property ladder.

Why was this new law proposed?

americans living in portugalThe new law proposal seeks to make it easier for young people to purchase their first home with the elimination of IMT (Imposto Municipal Sobre as Transmissões Onerosas de Imóveis, Municipal Tax on Onerous Transmissions of Real Estate) and Stamp Duty, two taxes needed to be paid when buying property in Portugal.

This is, in part, a response by the new government led by Luís Montenegro to the high emigration numbers in Portugal, caused in many ways by low wages in the country and the housing affordability crisis, with 30 percent of those born in Portugal between the ages of 15 and 39 having emigrated, according to the Emigration Observatory.

In addition to this, the government also wants to provide a public guarantee to make housing credit possible at 100 percent of the purchase price.

What is the new proposal?

Under the Programa de Apoio à Compra da Primeira Casa pelos Jovens (Support Program for Buying a First Home by Young People), Luís Montenegro has mentioned that he wants to “free young people from paying two down payments” when purchasing a house: The IMT and stamp duty and the down payment on the house for housing credit from banks, outlined below.

Taxes to be eliminated

The property taxes in Portugal that Montenegro has proposed to be eliminated for young first-time home buyers are:

  • IMT: This is a transfer tax that is applied to the property purchase in Portugal and ranges from 0 to 7 percent, depending on factors such as property type, value, location, and whether it will be the primary or secondary residence of the buyer.
  • Stamp duty: When it comes to buying property in Portugal, property transfer transactions are subject to stamp tax at a rate of 0.8 percent.

Making financing more accessible

The government wants a public guarantee to enable bank financing of the entire purchase price of a first home for young people.

What does this mean in practice?

If this government program is approved, young people aged 35 years or below will not need to pay the IMT or stamp tax when buying their first home. Plus, if they do not have sufficient savings to make at least 10 percent down payment of the lowest value between the house price and bank valuation, they will have the possibility of using a public guarantee to secure a housing loan with 100 percent financing.

This new proposal will break down two significant hurdles for young buyers in Portugal, enabling them to get their feet on the property ladder.

Elsewhere, Montenegro’s government is also planning on expanding housing supply and strengthening the function of the rental market to make it easier for young people to secure property in Portugal.