For large investors, investment funds and property developers operating in the residential market, the Housing Package introduced a powerful tax optimisation mechanism: Rental Investment Contracts (Contratos de Investimento para Arrendamento – CIA), which are particularly relevant for the Algarve given its strong property market. This innovative regime makes it possible to bring together, in a single structured agreement, an extensive set of tax exemptions and reductions for large-scale residential projects.
CIA may cover integrated operations involving new construction, deep renovation of buildings or the block acquisition of property portfolios intended for long-term residential letting.
What are CIA contracts and what is their purpose?
CIA are public contracts entered into between the developer/investor and IHRU (the Institute for Housing and Urban Rehabilitation), acting directly on behalf of the Portuguese State.
These contracts regulate the investment conditions in detail, identify the properties covered, set rent targets and define the tax benefits granted, and may run for up to 25 years.
This is a regime with a corporate and institutional focus. It is not intended for small private landlords with individual units, but for organised structures of significant size geared towards the long-term permanent housing market.
Who qualifies for this special regime in 2026?
Access to CIA is aimed at high-standard investment profiles and is strategically relevant for:
- Property developers and urban development companies;
- Institutional-type family property companies;
- Institutional investors and Family Offices;
- Real estate funds and Alternative Investment Undertakings (OIA).
For the project to be validated and approved by IHRU, the investment must meet strict criteria. In general terms, at least 70% of the total construction area covered must be allocated to stable residential letting. In addition, the rents charged must strictly respect the legal moderate rent limits. The investor must also demonstrate good standing and technical and management capacity, keep organised accounts suited to monitoring the project and have their tax and social security position fully up to date with the Tax Authority and Social Security.
The catalogue of tax benefits: IMT, IMI and AIMI exemptions
The approval and signing of a CIA provides unprecedented tax protection for the property asset, of particular relevance in the Algarve, including:
- Full exemption from IMT on the acquisition of land or buildings for the project.
- Exemption from Stamp Duty on the transfer and purchase of the properties.
- Exemption from IMI (municipal property tax) for a substantial initial period of up to 8 years.
- A 50% reduction in IMI in the subsequent period, within the limits of the regime.
- Full exemption from AIMI (Additional IMI) throughout the term of the contract.
- The reduced 6% VAT rate on eligible construction or rehabilitation works.
- A refund of 50% of the VAT incurred on specialised architecture, engineering, design and technical study services.
The combination of these benefits drastically changes the financial viability of the project, significantly reducing the Capex for acquisition, construction and operation of the assets.
The importance of prior analysis before acquiring assets
The decision to use a CIA and the preparation of the application to IHRU should take place before the investment is closed. It is essential to analyse in advance with a lawyer in the Algarve:
- The planning compliance of the properties to be acquired;
- The accuracy of the percentage of area allocated to residential letting;
- The financing model and the corporate structure used (Special Purpose Vehicle – SPV);
- Rent projections against the legal caps for 2026;
- The compliance of the overall works contracts and the execution schedule.
- An inadequate corporate or contractual structure at the initial stage may prevent access to the benefits or create serious obstacles to future compliance with the contract.
Binding commitments and risks of non-compliance
The price for enjoying these substantial exemptions is taking on strict, long-term obligations towards the State. The investor is bound to strictly maintain the allocation of the properties to residential letting, to fully respect the moderate rent limits and to submit detailed periodic monitoring reports to IHRU.
Any unjustified non-compliance or deviation leads to the revocation of the CIA, resulting in the loss of the tax benefits and the consequent obligation to repay in full all taxes not paid since the first day of the project, plus compensatory interest.
How URB LAW SERVICES structures your CIA contract
URB LAW SERVICES advises institutional investors throughout Portugal, especially in the Algarve. From our office in Almancil, we support your fund or company with:
- Detailed eligibility analysis of the asset and validation of the construction areas;
- The ideal corporate, contractual and tax structure for the project;
- Preparation, submission and follow-up of the contracting process with IHRU;
- Regulatory compliance control and mitigation of non-compliance risks.
- Protect your investment fund’s margins and optimise your assets. Contact our lawyers in Almancil.
