Portugal municipality keeps property tax at minimum for 2027

Lagos residents will continue to pay the lowest permitted rate of municipal property tax in 2027, as the council maintains a package of tax breaks for families and businesses.

By Kam Heskin, in News, Housing · 02 Oct 2026, 15:04 · 0 Comments

The IMI rate for urban properties will remain at 0.3%, the legal minimum in Portugal. The maximum rate municipalities can impose is 0.45%.

According to Lagos Council, choosing the lower rate means giving up around €6.7 million in potential revenue.

Families with children will also continue to receive an automatic reduction through the Family IMI scheme.

Households with one dependent will receive a €30 reduction, rising to €70 for two dependents and €140 for families with three or more. Around 2,300 families in Lagos are expected to benefit.

There is also help for landlords who rent properties as permanent homes.

Urban properties rented for permanent housing can receive a 20% reduction in IMI, provided the rental contract is registered with the tax authorities and valid for the relevant year.

Unlike the family reduction, however, this benefit is not automatic. Property owners need to apply to Lagos Council between 1 October and 30 November through its online services.

Further relief for homeowners

Some homeowners may also be able to extend their existing IMI exemption for another two years.

To qualify, the property must be the owner’s permanent home, have a taxable property value of no more than €125,000 and belong to an owner or household with annual gross income of no more than €153,300.

Properties that have undergone work within the city’s Urban Rehabilitation Area can receive a 30% IMI reduction where the relevant licences were issued between 1 December 2025 and 30 November 2026.

There is a tougher approach to properties that have been left empty for more than a year or are considered to be in ruins. Their IMI rate can be tripled.

Lagos gives up its share of residents’ IRS

The council is also once again choosing not to take its permitted share of residents’ personal income tax.

Portuguese municipalities can receive up to 5% of the IRS paid by residents. Lagos will waive its variable participation for income earned in 2027, leaving that portion with taxpayers instead.

The financial effect on the municipality will be felt in 2028.

Businesses will receive another tax break. Lagos will continue its policy, in place since 2022, of not charging the municipal derrama on taxable corporate profits subject to IRC.

The council estimates that decision will cost it around €1.9 million in potential revenue.

The package has already been approved by the Lagos Municipal Assembly and will apply in 2027.

For homeowners, families and businesses in the municipality, the result is largely a continuation of recent years: the minimum urban property tax rate, additional reductions for some households and landlords, and no municipal share taken from residents’ IRS.