The municipal authorities of Setúbal have decided to extend the exemption from the Municipal Property Tax (IMI) to support the housing market and attract new investors. This measure aims to stimulate construction, renovation, and property purchases while ensuring housing affordability for local residents.
What is the IMI Tax and Why is it Being Waived?
🏠 IMI (Imposto Municipal sobre Imóveis) – an annual property tax in Portugal.
📊 Tax rates:
- 0.3% – 0.45% for urban properties,
- Up to 0.8% for rural land.
📉 Purpose of the exemption:
- Make housing more affordable,
- Stimulate the construction sector.
Conditions of the Tax Exemption
✅ Extension for up to 5 years for:
- New housing developments under government-approved programs,
- Properties undergoing major renovations,
- First-time home purchases by young families.
🏡 The exemption applies to properties valued up to €300,000, which aligns with the average property price in the region.
Financial Impact
💰 Budget losses – €5 million per year, but offset by:
- Increased real estate transactions,
- Attraction of new investors.
📉 Additional measures:
- 50% reduction in IMI for developers investing in affordable housing.
Impact on the Real Estate Market
📈 Expected effects:
- Increased housing demand,
- Boost in construction activity,
- Attraction of foreign investments,
- Slower price increases.
💶 Average price per m² – €2,500.
📉 Price growth expected to slow to 3-4% per year instead of the previously forecasted 6-7%.
Economic Prospects
👷♂ New jobs:
- 1,500 jobs in the construction sector over the next three years.
🏗 Increase in tax revenues from a rise in real estate transactions.
🌍 Tourism development:
- Increased investment in rental properties,
- Enhancement of Setúbal’s tourism appeal.
Conclusion
🔹 Extending IMI tax benefits is a strategic step for real estate market growth.
🔹 Short-term budget losses are expected to be compensated by increased investments.
🔹 Setúbal is becoming one of the most attractive cities for real estate investment in Portugal.
