In a market where rent often consumes a disproportionate portion of monthly income, the Portuguese government recently created a set of mechanisms designed to facilitate young people's access to their first permanent home. For those under 35, buying a house is no longer just a long-term asset decision; in many cases, it can also be a more fiscally and financially efficient decision than continuing to rent.
The core of the support: where does the legal advantage lie today?
Currently, the two most relevant measures are:
a) exemption or reduction of IMT (municipal tax on the transfer of real estate) which can reach up to 7.5% and Stamp Duty, which corresponds to 0.8% – both calculated on the purchase price – in the acquisition of the first primary and permanent residence by young people up to 35 years of age;
b) the State's public guarantee on housing loans, which can allow financing up to 100% of the transaction value, within certain limits and requirements, thus overcoming the traditional credit limitation of 70/80% of the value imposed by banks.
From a legal standpoint, this means that young buyers can simultaneously benefit from a very significant reduction in entry costs and a mitigation of the main barrier to bank purchases: the need for equity capital for the initial down payment. This is where public policy ceases to be merely symbolic and begins to have a material impact.
IMT Jovem and IOF: immediate tax savings
In 2026, the Federal Revenue Service's practical table provides for an exemption from IMT (Property Transfer Tax) for young people aged 35 or younger who acquire their own permanent residence, on properties up to €330,539. Above this value and up to €660,982, the specific table for young people applies, with taxation only on the excess portion as per legal terms. The purchase also continues to be covered by the Stamp Duty exemption regime in eligible situations.
This represents a very significant difference compared to the general regime. For the purchase of a primary and permanent residence on the mainland for €330,000, a buyer outside the youth scheme would pay property transfer tax (IMT) calculated according to the general table and stamp duty on the property value, totaling approximately €15,300; however, an eligible young person, at the same level, is exempt from these charges.
A concrete example of tax savings.
For a property of €330.000:
- IMT “normal” for primary and permanent residence: €12.642,04
- Stamp Duty (0.8%): €2.640,00
- Total acquisition tax excluding youth regime: €13.962,04
- Total including eligible IMT Youth program: €0 in these two taxes
- The immediate savings, just on the down payment, is of €15.282,04.
In legal and economic terms, this is perhaps the greatest virtue of the measure: the State is not merely "providing a benefit"; it is drastically reducing the transactional cost of accessing property rights.
Who can benefit?
Under the IMT/IS regime, the logic is that of the first acquisition of a property intended for primary and permanent residence by someone under 35 years of age. The Government clarified that the exemption does not apply to those who already own residential property; and that, if only one member of the couple meets the requirements, the exemption applies only to the share acquired by that member. The same clarification also indicates that, if there was previous ownership, the exemption can only be considered again if more than three years have elapsed between the sale of that share of the property and the new acquisition, provided that the other legal conditions are met.
The second measure currently in force, the public guarantee, requires, cumulatively, among other requirements: age between 18 and 35 years, tax domicile in Portugal, income up to the 8th income tax bracket, no ownership of residential urban property, regularization of tax and social security status, acquisition of the first primary and permanent residence, and a transaction value not exceeding €450,000. The guarantee can reach up to 15% of the transaction value and is intended to enable financing of the total price, or at least 85%.
A reminder that this public guarantee regime applies to contracts signed until December 31, 2026.
A public guarantee: because it can be decisive
In banking practice, the difficulty for many young people lies not in affording a monthly payment, but in gathering, all at once, the initial down payment and the deed registration taxes. It is precisely here that the combination of tax exemption and public guarantee changes the game.
Without a public guarantee, a credit institution may require a significant down payment. For a property worth €330,000, a 10% down payment would represent €33,000; a 15% down payment would represent €49,500. With a public guarantee, the transaction can approach 100% financing of the transaction value, reducing or eliminating this need for equity capital, although always dependent on bank approval and compliance with the institution's risk criteria.
In other words, for an eligible young person, the difference isn't just "paying less taxes." It's being able to buy without having to immediately tie up tens of thousands of euros.
Loan repayment simulation: a realistic example in Odivelas
Let's take a plausible market example in Odivelas – Centro: a two-bedroom apartment advertised for €330,000, with 79 m², about 100 meters from the metro. In the same area/municipality, there are two-bedroom apartments for rent around €1,200/month. In the sales search for Odivelas-Centro, an average price of €4,350/m² is found in the area.
For simulation purposes, we use as a reference the rate of 2.88%, corresponding to the 50th percentile of new loans for primary residences contracted at variable rates in January 2026, as published by the Bank of Portugal. We also consider a term of 37 years, which the Bank of Portugal continues to indicate as the maximum indicative term for clients aged over 30 and equal to or under 35 years.
Simulation A: young person with public guarantee, 100% financing.
- Property price: €330.000
- Capital financed: €330.000
- Reference rate: 2,88%
- Term: 37 years old
- Estimated monthly payment: €1.209,09
- Equity capital required to pay the price: €0
- Equity capital required to pay taxes: €0
Simulation B: buyer without public guarantee, with a 10% down payment.
- Property price: €330.000
- Entrance: €33.000
- Capital financed: €297.000
- Reference rate: 2,88%
- Term: 37 years old
- Estimated monthly payment: €1.088,18
- Equity capital required to pay the price: €33.0000
- Equity capital required to pay taxes: €15.282,04
Direct comparison with rentals in Odivelas
If we compare the payment resulting from Simulation A with a rental income of €1,200/month, the monthly difference is practically zero: the estimated payment is about €9 higher than the rent, which is clearly advantageous given the associated right – the right to property, which ends up being an asset in constant appreciation and allows for a more stable life as it is not dependent on contract changes, lack of assistance or maintenance by the landlord, or even eviction for reasons provided for by law, namely the landlord's own use.
In other words, legally and financially, however, the positions are not equivalent.
In a lease, the monthly payment is limited to the temporary use of the property. In a purchase, the payment includes capital amortization, that is, a component of asset building. Even disregarding typical ancillary credit charges, the equivalence between market rent and a financing payment shows that, for certain profiles and locations, the argument that "rent is always cheaper" is no longer automatically true.
What a young buyer should carefully consider.
There are still relevant precautions.
First, the public guarantee does not replace the bank's solvency analysis. The measure does not automatically transform an applicant into an eligible borrower; it only reinforces the financing coverage within the applicable legal framework.
Secondly, the rate used in the simulation is a statistical reference, not a binding offer. The Bank of Portugal itself clarifies that the simulations do not replace the specific calculations and conditions of the credit institutions.
Third, the installment is only a part of the monthly cost of the property. There is also insurance, condominium fees, property tax, and maintenance. Even so, despite this caveat, the elimination of ITBI (Property Transfer Tax) and IOF (Tax on Financial Operations) and the possibility of enhanced financing substantially alter the down payment equation.
So, does it make sense to buy instead of renting?
For a young person up to 35 years old, the response today is much more favorable to buying than it was a few years ago, especially in situations where:
- The property is effectively intended for primary and permanent residence;
- the price remains within the most fiscally advantageous limits;
- There is job stability and the capacity to support the work;
- The alternative of renting, in the same area, is already close to the value of the mortgage payment.
This article does not replace consulting the relevant legislation, nor does it hold Prime Legal responsible.
