Lisbon renovation tax breaks may cover almost two-thirds of the city from 2027, including 6% IVA on building work
On 28 October Lisbon City Council approved new boundaries for the city's urban rehabilitation area (ARU, Área de Reabilitação Urbana), where property owners can get tax breaks for renovation. The area now covers 6,450 hectares, almost two-thirds of the city. It includes everything in the current area plus neighbourhoods built over the last 14 years. The map is divided into 42 sections, among them Alta de Lisboa and Quinta do Lambert. The new boundaries are due to take effect on 1 January 2027; the current ones expire in March 2027.
Owners of a flat or house in the ARU can get tax breaks for renovating it. Paulo Diogo, the council's director of urban planning, named the main ones: 6% IVA (Portuguese VAT) instead of the standard 23% on renovation work, and exemption from IMI, the annual property tax, and from IMT, the tax paid when buying property. However, simply having an address in the area does not entitle an owner to these breaks. Vasco Moreira Rato, the councillor responsible for urban planning, explained that they apply only to renovation work that meets the conditions set by law. We covered the conditions for the IMI and IMT exemptions in our article of 12 October.
The decision is not yet final: the new boundaries still have to be approved by the municipal assembly (Assembleia Municipal) and published in the Diário da República, Portugal's official gazette, by the end of December.
Only the parties of the ruling majority on the council — PSD, CDS-PP and IL — voted in favour. The opposition objected that the area takes in new neighbourhoods, including the upmarket Quinta dos Alcoutins with its golf course, as well as a stadium and the Hospital da Luz, all built less than 30 years ago. In the opposition's view, developers will get the tax breaks, while the council asks for no affordable housing in return.
