What changed
Just before the New Year, the government quietly reset a number that most foreign buyers have never heard of — and that most Portuguese homeowners barely track either. A Portaria signed by the Secretary of State for Fiscal Affairs, Cláudia Reis Duarte, fixed the average construction value per square metre at €570 for the purposes of Article 39 of the Municipal Property Tax Code (IMI), effective for 2026. That's up from €532, and it's the first time this value has increased since 2023.
It sounds like bureaucratic housekeeping. It isn't. This figure feeds directly into how Finanças calculates the valor patrimonial tributário (VPT) — the taxable value — on which your annual IMI bill, and potentially other property-related taxes, are based.
The mechanics, in plain terms
Under the IMI Code, the base value of a building equals the average construction value per square metre, plus the value of the plot of land, fixed at 25% of that figure. Add the two together and the ceiling used in the valuation formula for newly assessed buildings rises from €665 to €712.50 — an increase of roughly 7.1%, according to industry body APCMC, which put the jump at 7.14% relative to the value that applied from 2023 to 2025.
This isn't a random number pulled from a hat. By law it's proposed each year by the Comissão Nacional de Avaliação de Prédios Urbanos — the national commission responsible for urban property valuation — after consulting industry bodies, and it's meant to track real building costs: materials, labour, equipment, management, energy and communications.
For context, this base value has moved in fits and starts for two decades — starting at €600 in 2003, dropping to €603 after the financial crisis and staying frozen there until 2018, then climbing to €615, €640, and finally €665 (on a €532 base) from 2023 through 2025, where it sat unchanged for three straight years before this update.
Who actually feels this
Crucially, this is not a blanket tax hike on every home in Portugal. The higher figure applies only where a fresh valuation is triggered — it applies to all urban properties for which a Modelo 1 declaration is submitted from 1 January 2026 onwards. In practice that means:
- New builds completed and registered with Finanças from 2026.
- Renovations or major works that require a new Modelo 1 filing to update the property's tax record.
- Properties undergoing re-appraisal for other reasons — a change of use, a subdivision, or a first-time registration of an older, previously unassessed building.
If you already own a home whose VPT was fixed years ago and nothing changes, this update doesn't retroactively touch your bill. But if you're building a villa in the Algarve, converting a ruin in the Alentejo, or buying new-build off-plan for delivery in 2026, the higher construction value will feed into the VPT that Finanças assigns — and that VPT is the base for your annual IMI, calculated at the standard 0.3%–0.45% municipal rate depending on the council.
Why foreign buyers should care
For anyone relocating to Portugal and shopping for property in 2026, this is one more line item to build into the budget spreadsheet, alongside the transfer tax (IMT), stamp duty, and notary fees already covered in our property buying guide. A higher VPT doesn't just mean higher annual IMI — it can also nudge up exposure to the AIMI wealth surcharge for owners of higher-value portfolios, and it factors into other valuation-linked calculations Finanças runs on newly registered buildings.
The increase itself is modest in absolute terms — €38 per square metre on the construction component — but it compounds. On a 200m² new-build house, the change in base value works out to roughly €9,500 more in taxable base once the 25% land uplift is applied, which at a typical municipal IMI rate translates into a small but real annual increase, not a one-off.
What to watch next
Two things worth tracking through the rest of 2026: first, whether individual municipalities adjust their own IMI rates (they set annual rates within the national bands, and some have been raising them to offset frozen VPTs from prior years); second, whether Finanças issues further guidance clarifying edge cases — particularly for foreign owners renovating older properties who may not realise a Modelo 1 filing is required before works are signed off.
If you're planning a purchase, new build, or renovation this year, get a written estimate of the expected VPT from a local accountant or the Portal das Finanças before committing to a budget — the days of a frozen, predictable construction baseline are, for now, over. As always on tax matters, treat this as informational and confirm your specific numbers with a qualified Portuguese accountant or directly with Finanças before signing anything.