As part of the government's ongoing legislative reform program, a new law, Decreto-Lei n.º 48-A/2024 de 25 de julho, has been enacted and is effective from August 1, 2024. This law provides significant tax relief for young individuals aged 35 and under when purchasing their first home for personal use. Specifically, it exempts them from paying the Municipal Property Transfer Tax (IMT) and the Stamp Duty (IS), two significant taxes that typically apply during real estate transactions.

Key Aspects of the New Law:

- The law amends articles 4, 9, 11, and 17 of the CIMT (Municipal Property Transfer Tax Code), outlining the conditions for tax exemption.

- It adds Article 7-A to the Stamp Duty Code (CIS), establishing a category of taxpayers who are exempt from paying the Stamp Duty.

- It also introduces a mechanism to compensate municipalities for the revenue loss incurred due to the exemption from IMT.

Eligibility Criteria for Tax Benefits:

To qualify for these tax benefits, the following conditions must be met:

- Age Requirement: The buyer must be 35 years old or younger on the date of property transfer.

- First-Time Homebuyers: The property must be the first home purchased by the individual and must be used exclusively as their primary residence.

- No Other Property Ownership: The buyer must not have owned any other property in Portugal in the three years preceding the purchase.

- Financial Independence: In the year of purchase, the buyer must not be considered a dependent, as defined in Article 13 of the CIRS (Personal Income Tax Code).

- Property Value: The property's cadastral (taxable) value must not exceed €316,772. For properties valued between €316,772 and €633,453, only the portion exceeding €316,772 will be subject to taxation. Properties valued above €633,453 do not qualify for the exemption.

Special Considerations

- Joint Purchases: If a married couple purchases a property together, both spouses must meet the eligibility criteria mentioned above.

- Partial Exemption: Individuals over 35 years old can also benefit from this tax relief if they purchase a property with a partner who is eligible. In such cases, the exemption applies only to the portion of the property value corresponding to the eligible partner's share. The remaining portion will be taxed according to standard IMT and IS rates.

Important Note:

The tax exemption will be revoked if, within six years of purchase, the property is not used for the declared purpose, except in certain situations outlined in the newly revised Article 11 of the CIMT.

We will continue to monitor how this new law is applied and will provide updates on the program's implementation.

Additional Information

At the time of publishing this article, the updated versions of the tax codes were not yet available on the Portal das Finanças For the most current information, please refer to Decreto-Lei n.º 48-A/2024 de 25 de julho