PORTUGAL MODERN

Are you planning to buy or build a beautiful, modern home in Portugal? The Portuguese government has released in May 2026 a massive new housing law (Decree-Law 97/2026) that changes everything.

This new package brings huge tax cuts for building houses, but it also includes strict rules about where you pay your taxes. Whether you are a local Portuguese citizen or an expat moving from abroad, timing your move is now the most important step.

Here is how the new rules work, and why this is a historic opportunity for modern architecture hotspots like Bom Sucesso.

The Golden Rule: Your Tax Residency Comes First

If you are an international buyer, the very first thing you need to understand is Portugal’s new rule on Tax Residency.

  • The Non-Resident Penalty: If you buy a residential property in Portugal as a non-resident (for example, as a holiday home while living abroad), you must now pay a flat 7.5% IMT (Property Transfer Tax). This is much higher than what residents pay which is a progressive tax model .
  • The 2-Year Window for Expats: There is a great exception. If you buy a home and become an official Portuguese tax resident within 2 years, you can apply to get a refund for that extra tax you paid.
  • The 6-Month Move-In Rule: If you want to use the brand-new construction tax cuts (explained below) to build a modern home, you must officially move into the house as your main, permanent home within 6 months of finishing it, and live there for at least 12 months. If you do not, you will face a heavy 10% tax penalty.

The takeaway? To get the biggest savings, you should plan to make Portugal your permanent, official home.

The Big Win: Construction Tax Drops from 23% to 6%

For years, the biggest complaint when building a modern home in Portugal was the high Value Added Tax (VAT) on construction services. Builders had to pay a massive 23% tax on labor and building works.

Under the 2026 law, that tax drops all the way down to 6% for building or renovating a home!

To get this cheap 6% rate, your project must meet these conditions:

  • The house must be your main, permanent residence.
  • The total value of the property (Land + Construction) cannot be more than €660,982.

If you are a private individual building your own home, you pay the bills and then apply for a partial tax refund to get the difference back. This can save you tens of thousands of euros on a modern build!

You want to Rent out?

The 6% rate applies also if you build a house to rent out to others at a “moderate rent” capped at €2,300 per month.

A Real Example: How Big Can Your House Be?

Let’s look at example to see how this €660,982 limit works in practice if you want to build a high-quality modern villa:

  • The Plot Cost: Imagine you buy a beautiful plot of land for €130,000 at Bom Sucesso.
  • The Remaining Budget: To stay under the government’s tax-cut limit, you have €530,982 left to spend on the actual construction works (€660,982 minus €130,000).
  • The Size of the House: If we estimate a premium building cost of €2,000 per square meter (sqm) (including the low 6% VAT, architect fees, and licenses), you can build a house that is 265.5 square meters big!

What does a 265.5 sqm house look like? It is a very spacious 3-bedroom or 4-bedroom luxury home. This size easily allows for a large open-plan living room and kitchen, multiple en-suite bathrooms, a garage, and the signature large glass walls and outdoor terraces that define modern architecture.

What This Means for Bom Sucesso’s 130 Golden Opportunities

If you love contemporary architecture, you are likely familiar with Bom Sucesso Resort near the Óbidos lagoon. It is famous as a permanent showcase of modern living, designed by a collection of global architecture masters.

The new 2026 tax updates are expected to completely transform the resort because of one incredible fact: Bom Sucesso still has around 130 empty building plots available.

All of these remaining plots come with a designed by Portuguese modern Architects, some of them by legendary Pritzker Prize-winners:

  • Álvaro Siza Vieira (The master of Portuguese modernism)
  • Eduardo Souto de Moura (Famous for his beautiful, minimalist stone and concrete designs)
  • David Chipperfield (The iconic British architect known for elegant simplicity)

Before this year, building one of these unique, high-end architectural masterpieces meant paying a painful 23% tax on top of your construction costs. Today, thanks to the drop to 6%, these 130 empty plots have suddenly become the better investment opportunity for modern design lovers in Portugal.

Summary Checklist for Buyers

  1. Check the Combined Price: Ensure your plot price plus construction costs stay under the €660,982 limit to unlock the 6% tax rate.
  2. Plan Your Move: If you are an expat, change your official tax residency to Portugal within 2 years of buying to avoid the non-resident property tax penalty.
  3. Move In Quickly: Register your new modern villa as your permanent home within 6 months of completion.

Disclaimer: Tax laws can be complicated and depend heavily on your personal situation. Always speak to a registered Portuguese lawyer or accountant before signing any contracts or changing your tax status.