Barbara Queiróz Updated: December 19, 2025
Portugal has always attracted a diverse mix of international buyers: Lifestyle movers seeking a sunnier home base, digital professionals combining work and travel, and more traditional investors focused on stable rental income and capital growth.
But as demand has increased, the government has been under pressure to address housing affordability. To address this, a new flat 7.5 percent Municipal Property Transfer Tax (IMT) for non-residents has been proposed to rebalance the market while still welcoming foreign capital.
In this article, we’ll take a close look at what this proposal entails, when it may come into force, and how it could impact the finances required to purchase property in Portugal.
What is the Portugal IMT tax increase?
The government has proposed a flat 7.5 percent IMT on the purchase of residential property by non-residents.
This would replace the current progressive IMT scale of taxes, which ranges from 0-8 percent, depending on the price, location, and whether the property is a primary or secondary residence.
While non-residents would pay a 7.5 percent IMT when buying property in Portugal, this is a one-time tax that applies to all buildings, whether rustic or urban, whenever the buyer is classified as a non-resident for tax purposes in Portugal.
After buying real estate, several other property taxes in Portugal must be paid annually. These include the Imposto Municipal sobre Imóveis (IMI), which is relatively low, typically ranging from 0.3 to 0.45 percent, where rural properties are generally 0.8 percent.
The IMI is calculated based on the Taxed Patrimonial Value (VPT) of the property, not on the purchase price. The tax authorities determine the VPT based on the property’s characteristics (size, age, location, type of construction, etc.).
Over a 10- to 15-year holding period, Portugal’s low IMI rates can offset the impact of a higher upfront IMT, making total ownership costs highly competitive for foreign buyers who plan to hold quality assets in prime locations.
By comparison, in the United States, homeowners typically pay 1 to 3 percent annually in property taxes, depending on the state and municipality, as well as transfer taxes at the time of purchase.
Who is affected?
The measure targets buyers who are non-resident at the time of purchase, who do not meet the usual tax residency criteria in Portugal, and don’t have the intention of being in Portugal for the next two years.
Tax residency is generally triggered if you spend more than 183 days (consecutive or not) in the country in any 12‑month period or maintain a habitual home that indicates an intention to reside.
Certain categories are expected to remain outside this flat rate, such as foreign nationals who are already Portuguese tax residents and some buyers performing public functions for the Portuguese state, who will continue to be subject to the standard progressive IMT tables.
When could it become law?
The 7.5 percent IMT for non-resident buyers is still a proposal and has not yet fully entered into force as binding law.
This means that it has only been submitted to Parliament and will require approval before moving to the next steps.
After parliamentary approval, the government must still issue a decree-law and publish it in the official gazette.
Since it was submitted to Parliament in December 2025, there is a reasonable assumption that it won’t come up for parliamentary voting until 2026. Even still, it might not become law at all.
Strategic Opportunities in the New Landscape
From an investment perspective, the reform tends to reward buyers who think long-term and engage more deeply with Portugal, either through residency or by supplying quality housing to the local rental market.
Investors who structure acquisitions with professional advice, assessing IMT, IMI, possible AIMI exposure, and local market fundamentals, can still access attractive net yields and strong lifestyle upside in cities like Lisbon, Porto, and key coastal hubs.
Because the annual holding tax is low, high-quality properties in desirable neighbourhoods can generate a favourable balance between rental income, limited running costs, and capital appreciation, even when factoring in a 7.5% entry cost.
For many non-resident buyers, Portugal therefore remains not only a lifestyle choice but also a cost-effective and resilient property market over the medium to long term.
also read: property tax for foreighn buyers
Structuring Your Property Taxes
For purely lifestyle buyers who remain non-resident and purchase a second home or holiday property, the main impact is a higher one-off entry tax that needs to be built into budget calculations and financing strategies.
For those aiming to transition into residency or to hold buy-to-let assets, the measure is more nuanced: Careful timing of residency, lease terms, and documentation can materially reduce the ultimate IMT burden.
This is where planning becomes essential, and Goldcrest can assist you with that. Although it’s not in force yet, it could alter property rates in the future.
Now is the right time for us to help you coordinate your property purchase with your visa or residency timeline, so that you can lock in the flat 7.5 percent or align closer to traditional, lower effective rates.
