Major利好! Property tax in Portugal to decrease
In 2026, the per-square-meter value used for calculating IMI (Municipal Property Tax) and fiscal property valuations in Portugal will be reduced to €570, ending a three-year period during which this value remained unchanged.
‘Pursuant to Article 39 of the Municipal Property Tax Law, effective in 2026, the average construction value per square meter is set at €570,’ states the decree published in the Diário da República (Portugal’s official gazette).
IMI regulations specify that ‘the Construction Value (Vc) equals the average construction value per square meter plus the land value per square meter, the latter being fixed at 25% of the former.’ The average construction value is determined by considering, in particular, ‘direct and indirect costs incurred during construction, including materials, labor, equipment, management, energy, communications, and other consumables.’ This per-square-meter construction value is a key component of the Urban Property Valuation System formula and is used to calculate the Taxable Property Value (VPT), on which the IMI rate is based.
Although it is one of the factors determining a property’s taxable value, this new figure does not apply automatically—it will only be reflected in new constructions, properties undergoing significant renovation or reconstruction, or following a new official valuation.
The per-square-meter value used for existing properties has varied over time: it was set at €600 in 2003 and 2004, increased to €612.50 in 2005, and rose further to €615 in 2006—a level maintained until 2008.
In 2009, amid the unfolding global financial and economic crisis, it dropped to €609. By 2010, it fell again to €603, remaining at that level until 2018. It rebounded to €615 in 2019 and held steady through 2021. In 2022, it rose to €640, then increased to €665 in 2023, where it remained until this year.
Portugal’s reduction in the IMI property tax base value will help ease the tax burden on homeowners and property investors, sending a broadly positive signal to the residential market. While the actual impact depends on whether new valuations are triggered, the measure is likely to enhance investment appeal and improve the stability of real estate returns.