Property Transfer Tax in Portugal for Foreigners: New Rules for Non-Residents

On September 25, 2025, the government announced an increase in the Portugal property transfer tax (IMT) for non-resident buyers, while Portuguese emigrants will be exempt.

The measure aims to make the housing market fairer without discouraging foreign investment. Full details of the updated IMT rates will be released as part of the upcoming fiscal package.

This guide covers:

• What taxes do you pay when you sell a house in Portugal?
• What is the property gains tax in Portugal?
• Who pays property transfer tax in Portugal?
• How long can I stay in Portugal without becoming a tax resident?

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Le informazioni contenute in questo articolo hanno un valore puramente indicativo. Non costituiscono consulenza finanziaria, legale o fiscale e non rappresentano una raccomandazione o una sollecitazione a investire. Alcuni fatti potrebbero essere cambiati dal momento della stesura.

What is property tax called in Portugal?

Portugal doesn’t have a single property tax. Instead, several different taxes apply at different stages of buying, owning, or selling real estate. These include transfer taxes, annual ownership taxes, and additional levies for high-value properties.

• IMT (Imposto Municipal sobre Transmissões Onerosas de Imóveis)

This is the property transfer tax, paid when you buy real estate. Rates are progressive up to 8% for residential property and 6.5% for commercial or rural property. The exact rate depends on the purchase price, location, and whether it is your primary residence.

• IMI (Imposto Municipal sobre Imóveis)

An annual municipal property tax based on the cadastral (tax) value of the property rather than its market value.

• Rates typically range from 0.3% to 0.45% for urban properties and 0.8% for rural properties.
• Paid yearly by both residents and non-residents.
• AIMI (Adicional ao IMI)

An additional property wealth tax on the total Portuguese property holdings of an individual or company. It is charged in addition to IMI and applies to both individuals and companies.

• 0.7% tax rate on property valued between €600,000 and €1 million
• 1% tax rate on property valued between €1 million and €2 million
• 1.5% tax rate on property worth over €2 million

For married couples filing jointly, the exemption doubles to €1.2 million.

• Stamp Duty

Charged at a flat rate of 0.8% on the property’s declared purchase price during transfer. It can also apply to inheritance, gifts, or certain financial transactions, although direct family inheritances and gifts (between spouses, parents, and children) are generally exempt.

• Capital Gains Tax (CGT)

Non-residents selling property in Portugal are now taxed similarly to residents: only 50 % of the capital gain is subject to tax, and that portion is taxed at progressive income tax rates (currently ranging roughly from 14.5 % to 48 %).

• Rental Income Tax
  • For long-term rentals, non-residents are taxed at 28% flat rate on net rental income.
  • For short-term rentals (Alojamento Local), income may be taxed under simplified rules, with effective rates around 6% to 10% after applying a 35%–50% taxable base.

• Inheritance and Gift Taxes

Portugal does not have a formal inheritance tax, but stamp duty of 10% applies to gifts or inheritances outside the immediate family. Transfers between spouses, children, or parents are exempt.

What tax do you pay when buying a property in Portugal?

IMT (Imposto Municipal sobre Transmissão Onerosa de Imóveis) is the property transfer tax paid by the buyer when acquiring real estate.

Rates are progressive for residential urban property and depend on value: up to 8%, depending on type, location, and whether it is your permanent residence.

For non-residents, the IMT works the same as for residents; there is no separate non-resident rate for the transfer tax itself.

What is the property tax rate in Portugal for non-residents?

For non-residents, property taxation in Portugal includes both transfer taxes when buying and capital gains taxes when selling. They now face a higher IMT when buying but a more equitable CGT regime when selling.

Property Transfer Tax (IMT):
As of September 25, 2025, Portugal announced an increase in the Municipal Property Transfer Tax (IMT) specifically targeting non-resident buyers.

This change aims to make the housing market more equitable and discourage speculative foreign property purchases.

The new rates have not yet been released, but they will primarily affect non-residents buying second homes or holiday properties.

Portuguese emigrants and foreign residents are exempt from this increase.

The change will be formalized in the upcoming fiscal package, expected to detail revised brackets and calculation methods.

According to Housing Minister Miguel Pinto Luz, the policy is meant to redistribute wealth fairly rather than reduce foreign investment.

The government maintains that Portugal remains one of Europe’s most attractive real estate markets, combining transparency, tax stability, and strong lifestyle appeal.

How much tax do you pay when selling a property in Portugal?

The taxable gain from selling Portugal real estate is calculated by subtracting the original purchase price and allowable expenses (such as notary and registration fees, real estate agent commission, and documented property improvements) from the final sale price.

• Tax residents:
  Residents are only taxed on 50% of the net gain. The taxable half is added to their total annual income and taxed at progressive income tax rates, which can reach up to 48% for high earners.
• Non-residents (post-2023 rules):
  Since January 2023, non-residents are taxed the same way as residents — only 50% of the capital gain is taxable, instead of the previous flat 28% on 100% of the gain.
• Exemptions and ways to reduce CGT:
  There are several legal ways to reduce or avoid capital gains tax in Portugal:
  • Reinvestment in a new home: If the property sold is your primary residence, and you reinvest the full sale proceeds into buying another primary home in Portugal within 36 months, you can be exempt from CGT.
  • You must declare your new address as your tax residence within 12 months after reinvesting.
  • Documented improvements: Renovation or maintenance works that increase the property’s value, such as new insulation, heating systems, or extensions, can be deducted if you provide official invoices and proof of payment.

Proper documentation is key to benefiting from these exemptions. Portugal’s tax authority (Autoridade Tributária) routinely reviews supporting receipts and timelines to confirm eligibility.

What triggers tax residency in Portugal?

You are considered a tax resident in Portugal if you spend 183 days or more in a calendar year in Portugal, or if you have a permanent home there and intend to make Portugal your habitual abode.

Becoming a tax resident can allow you to access exemptions (e.g. primary residence sale rules) and change how much of your capital gains are taxed.

What are the pitfalls of buying a property in Portugal?

• High IMT & upfront costs: For expensive properties, IMT can be a large sum. Be sure of the marginal rate applicable.
• Legal costs, notarization, notary fees, registration fees add up beyond just IMT.
• Capital gains tax: older flat 28% rule for non-residents is gone, but if documents are not in order (receipts for improvements, proof of purchase costs, etc.), you may lose deductions.
• Currency and inflation-adjustment complications for older purchase prices.
• Unclear rules for primary residence vs secondary/investment property and reinvestment exemptions.
• Possible municipal variations in IMI, cadastral value under-valuation, sometimes disputes on valuation.

Who needs a tax representative in Portugal?

Non-residents who own property, earn income, or conduct any taxable activity in Portugal are generally required to appoint a tax representative.

This representative acts as a local point of contact with the Portuguese tax authorities, ensuring that tax correspondence, filings, and payments are handled correctly.

Since July 2022, EU and EEA residents with tax arrangements that allow information exchange are no longer required to have a tax representative.

However, non-EU residents, such as those from the US or the UK, must still appoint one to remain compliant with Portuguese tax regulations.

Conclusione

Portugal’s property tax framework offers clear benefits and a fairer regime for non-residents since the post-2023 changes.

While property transfer tax (IMT), annual property tax (IMI), and stamp duties remain, the capital gains taxation rule shift means non-residents pay much less in many cases than under the old flat-rate 28% system.

Always consult a Portuguese tax professional to verify how these rules apply to your specific case.

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