Teresa Patrício is a Lisbon native and graduate of Lisbon Law School who founded her own practice, IPBN member company Teresa Patrício & Associados (TPA) in 2005. Her on-the-ground experience began with her two-year traineeship as an advisor on property law for an international group of food distribution, between and then as a Tax Consultant in a multinational corporation in Lisbon until 1998. Teresa went on to become a senior lawyer at an Anglo-Portuguese Law Firm from until 2002, when she left to practice as a sole practitioner.

The rapid growth of her practice led her to qualify as an English solicitor, and further, where she is today— running the show at her own practice. TPA is a niche firm with dually qualified Portuguese advogados and English solicitors who understand the specific needs of both national and foreign clients and provide tailored legal advice to meet their requirements. That said, the IPBN was curious to find out what she had to say about what the government in Portugal is doing to facilitate housing acquisition and offer of affordable property for the young generation, for starters.

Teresa told the IPBN, "It is evident that the prices of property in Portugal have increased over the years – for young people/young couples living in Portugal, it was becoming impossible to lease or purchase a property, which was even more difficult in the main cities such as Lisbon, Porto or in the Algarve region.

Due to the crisis in the habitation sector, the new Government is now implementing some measures to assist the young generation and to facilitate the acquisition of property. For example, on July 10th, 2024, Decree-Law No. 44/2024 was published, which establishes the conditions under which the State can provide personal guarantees to credit institutions to obtain credit and permanent habitation by and for young people up to the age of 35.

This measure is cumulative with the exemption from the payment of Municipal Property Transfer Tax (IMT) and Stamp Duty (IS), also intended for the acquisition of their first primary residence by people up to 35 years of age. This measure was approved by the Parliament on June 20th and has been in force, since 1st August 2024."

When asked what the conditions to apply for the exemption from the payment of Municipal Property Transfer Tax (IMT) and Stamp Duty (IS) are, the seasoned lawyer had much to say.

Teresa said, "To be able to benefit from the exemption from payment of IMT and IS, the applicants must be younger than 35 years old and purchasing a property as their primary residence. Moreover, the applicants in the year of acquisition of the property should not be considered dependents in their household for income tax purposes."

According to the lawyer, there is also a limit in terms of the price of the property. She stressed three major points:

1. The exemption from payment of the IMT and IS is only applicable for the purchase of property that does not exceed € 316,772.00.

2. If the purchase price is between € 316,772.00 and € 633.453,00, the payment is due, but the taxes are only due on the part exceeding the said amount of € 316,772.00.

3. If the purchase price is higher than € 633.453,00 no exemption is applicable.

This tax benefit applies to young people who fulfill the requirements, regardless of their nationality.

This information lead to another question: If the young people already own property and decide to sell one property to purchase a new one, are they able to benefit from the exemption from the payment of IMT and IS? According to Teresa, the answer is no. 

She explained, "Young people who, at the date of acquisition of the property or in the previous three years, own or have any other right over an urban building intended for habitation, are excluded from this measure. It is also important to note that if the purchase of the first property as a primary residence occurred before 1st August 2024, they are also excluded from this exemption since this measure is not retroactive. Therefore, once the new Government presented this measure, many deeds were postponed to benefit from the exemption."

When asked if, after purchasing the property and benefiting from the exemption, the young people could use the property for other purposes (like to lease it out), she said the answer here is also no. This benefit is exclusively for property as a primary residence. Teresa said, "If, within six years from the date of acquisition of the property, a different use is made of the same (for example, if a short-term letting license is requested), the young person or young couple will lose the tax exemption benefit."

However, there are some exceptions provided by law, in which there is no loss of said benefit, namely in the following situations:

1. Sale of the property
2. Change in the composition of the respective household, due to marriage or partnership, dissolution of marriage or partnership or increase in the number of dependents, provided that the building remains exclusively intended for habitation
3. Change of the workplace to a distance of more than 100 km from the building, provided that the building remains exclusively intended for habitation

This information is also relevant for people who purchase property for their primary residence regardless of their age. Anyone who buys a property, in Portugal, for habitation, pays IMT. However, if the property price is less than €101,917.00 and is only for residential use (primary residence), the buyer will not have to pay IMT, as there is an exemption for residential property up until this amount.

Although the purchase of a property used exclusively for residential purposes is, potentially, a tax-exempt purchase, depending on the value, if, within six years from the purchase, the use of the acquired house changes, namely for short-term letting, the tax exemption will disappear. A 6.5% tax rate will then apply because the property is no longer for residential purposes.

Lastly, when asked if she considers that this measure will contribute to sorting out the habitation crises in Portugal, Teresa was hopeful but realistic. She said, "It may contribute in a way, but the fact is that the prices of property in Portugal are high and still increasing. It is very difficult to find property at a price that doesn't exceed € 316,772.00, especially in Lisbon and Porto. Even if it is possible, the properties are usually studio flats or 1-bedroom flats, which for the young generation may not be sufficient, especially if they intend to have children. Moreover, this is a measure that concerns only people who are younger than 35 years old. To have a greater effect, it should have been designed to assist people who intend to purchase a property for primary residence and not be limited by age."

In conclusion, Teresa believes that since the habitation crisis is a concerning issue, not only in Portugal but in all of Europe, this measure is well-received and will assist the young generation in the purchase of their first primary residence. She noted, "We look forward to seeing more measures in this area to mitigate or contribute to sorting out the housing crises."