Property Taxes in Portugal: The 2026 Ultimate Investor’s Guide

Taxes When Buying Property in Portugal

When purchasing real estate in Portugal, buyers pay several one-time taxes at the point of acquisition. These taxes vary depending on the property value, type, and intended use.

Property purchase tax (IMT)

The Imposto Municipal sobre as Transmissões Onerosas de Imóveis (IMT) (Municipal Tax on Onerous Transmissions of Real Estate) is a transfer tax levied over the purchase price of the Portugal property.

Also referred to as the property transfer tax, the IMT rate ranges from 0 to 10 percent and is levied on the property purchase price. The 0 to 8 percent range depends on the price, location, property types, and intended use or purpose for the property (either for your own permanent housing or to be used as a secondary residence).

The fixed rate of 10 percent applies in cases where the buyer has connections with territories that benefit from more favorable taxation schemes, known as blacklisted jurisdictions.

The IMT Tax rates on urban property exclusively intended for use as a permanent place of residence are listed below.

Source: PWC Portugal

You can use the following sum to work out the purchase property tax in Portugal:

IMT = property value x tax rate x tax deduction

You can also calculate the percentage using our Portugal Property Tax calculator.

To calculate the taxable value of the IMT, you can use the following criteria:

• Type of property: Urban property or rural property
• Buying purpose: Principal or secondary residence
• House location: Mainland Portugal or its autonomous regions
• Blacklisted jurisdictions: Whether the property owner has connections with territories that benefit from favorable taxation schemes

Specific IMT circumstances and tax rates

The applicable tax rate for IMT (purchase property tax) is:

• 5 percent: For agricultural and rustic lands (not designated for construction nor for generating agricultural, forestry, or livestock income)
• 6.5 percent: For commercial properties and building plots
• 10 percent: Property acquired by a corporation based in a jurisdiction that is on a blacklist

IMT property tax exemptions in Portugal

There are exemptions to the Portugal property purchase tax (IMT). The Portuguese government can offer exemptions in special circumstances to provide some tax relief.

IMT tax exemptions for entities and in specific situations

The following are instances where IMT exemptions apply for entities.

• Business operations: During mergers and splits of entities
• Government entities and public bodies without a business nature
• Foreign states: When acquiring buildings for the headquarters of diplomatic or consular missions and residences for heads of missions
• State and public or private entity agreements
• Legal entities with public utility status: For goods intended to achieve their statutory objectives
• Religious legal entities: For the acquisition of goods for religious purposes by duly registered religious legal entities
• Buildings of national, public, or municipal interest
• Properties qualifying for the Investment Promotion Tax Regime
• Economically disadvantaged regions: Commercial companies that acquire goods for agricultural or industrial activities of great economic and social relevance are exempt.
• Physical culture associations: When acquiring facilities that cannot be used for paid shows
• Educational and cultural entities: Museums, libraries, schools, and educational and cultural entities are exempt if the assets acquired are intended to fulfill their statutory purposes.
• Real estate investment funds held by government entities: If the assets acquired are intended to fulfill their statutory purposes
• Credit institutions: If in execution, bankruptcy, or insolvency proceedings, and also commercial companies whose capital is dominated by these institutions

IMT tax exemptions for individuals

Next, let’s explore the instances where IMT exemptions apply to individuals.

• Young adults under 35: Since 1 August 2024, individuals under 35 may be exempt when buying their first permanent home, with total exemption up to €316,772 and partial exemption for properties valued between €316,772 and €633,453. These apply regardless of the individual’s income, according to the Portuguese government.
• Primary residence purchase: Individuals purchasing urban properties solely for their own permanent residence are exempt from IMT if the property value does not exceed €101,917 in mainland Portugal and €127,396 in the Azores and Madeira.
• Resale properties: Purchasing properties for resale can qualify for an exemption if the property is resold within one year and not resold again within that period, with at least one property resold in each of the two previous years.
• Affordable Rental Program (PAA) properties: The program offers exemptions to landlords who sign qualifying affordable rental contracts, incentivizing lower rents for low-income tenants to boost long-term rental access.
• Rehabilitation works: For urban properties over 30 years old or located in urban rehabilitation areas if renovation works begin within three years after acquisition
• Young farmers and forestry activities: If young farmers buy rustic buildings for their first agricultural venture or if purchasing rustic properties in Forest Intervention Zones

Stamp Duty (Imposto do Selo)

Said to be the oldest tax levied by the state, the Imposto do Selo tax, also referred to as stamp duty, is an additional transaction cost for property buyers. The buyer must pay stamp duty on title deeds, contracts, bank mortgages, and loans during the property buying process. Securities subject to stamp duty also include bills of exchange and promissory notes, although these are not typical instruments for property acquisition.

The stamp duty amount you pay depends on the property’s worth. The stamp duty rate for purchasing a property in Portugal is 0.8 percent of the value of the business or the property’s value, levied on whichever value is higher.

If the property is donated, the stamp duty for the transaction will be 10 percent of the business’s or the property’s value.

When purchasing a home, the stamp duty is paid to the Portuguese Tax Authority, and the stamp duty on the deed of sale. Some notaries may agree to receive the amount and pay the tax authority on your behalf.

Based on the stamp duty code, you must also pay stamp duty when you take out a bank mortgage, which is levied at different rates depending on the term of the loan. These rates include:

Note: Under certain circumstances, corporate property ownership transactions can be exempt from stamp duty. These circumstances include acquiring relevant real estate for investment purposes within the Investment Support Tax Regime (RFAI).

Find out more about property ownership: Type of Property Ownership in Portugal: An Overview.

You may also be eager to know about the true cost of owning property in Portugal. You can find out in our guide to the total cost of ownership.

Notary fees

Thirdly, although they are not property taxes in Portugal, you must consider Notary Fees. The Notary is the private entity responsible for providing you with the official documents that prove you are the owner of the property, like when you sign the final deed of sale. This fee usually amounts to between €500 and €1,000.

Taxes After Purchasing Property in Portugal

Property owners pay property taxes in Portugal every year after buying property. The Portuguese tax system divides these taxes into municipal property tax (IMI) and additional tax (AIMI) on high-value properties.

Annual municipal property tax (IMI)

In Portugal, you pay specific taxes to municipalities based on the type of property you own. The annual municipal property tax is known as the IMI (Imposto Municipal sobre Imóveis).

The tax rate for IMI is 0.3 to 0.45 percent of the total real estate value for urban properties and 0.8 percent for rural properties. Both local and foreign property owners must pay IMI property tax Portugal regardless of their residency status.

Each municipality sets its own Municipal Property Tax (IMI) rate within limits set by the Portuguese government. IMI is based on the Property Tax Value (VPT), not the property’s purchase price. The VPT is automatically adjusted to 75 percent of the currency devaluation rate every three years.

The new Mais Habitação program lets local authorities impose higher IMI rates on vacant or abandoned properties. In urban pressure zones, the tax obligations can be increased tenfold, with an additional 20 percent yearly penalty. For rustic properties, the rate can rise from 0.8 percent to 2.4 percent, at the discretion of local authorities.

Portuguese municipalities receive funding from the property tax in Portugal, which is also used to maintain public facilities. When you own the property on the last day of the applicable tax year, you are responsible for paying the IMI tax. The value of the tax asset (TPV) must be multiplied by the relevant rate to determine the IMI tax. Depending on the assessed value of the IMI, payment can be made in the following installments:

• If the total tax amount is up to €100, the full payment is due by the end of May.
• For amounts exceeding €100 but not surpassing €500, payment can be divided into two installments in May and November.
• Amounts exceeding €500 allow for payment in three installments in May, August, and November.

Exemptions on IMI tax

IMI is an annual immovable property tax in Portugal, but several exemptions may apply depending on the owner’s circumstances and the property’s characteristics.

The first is a permanent IMI exemption for low-income households that own low-value property. This exemption is means-tested and intended to support families with limited financial resources.

Temporary IMI exemptions are also available in specific situations.

Firstly, new property owners who acquire a property as their primary residence could qualify for a temporary IMI exemption of up to three years, provided that the property’s taxable value (VPT – Valor Patrimonial Tributário) does not exceed €125,000.

Secondly, properties undergoing rehabilitation may qualify for a temporary IMI exemption of up to three years. This applies to buildings that are over 30 years old or located in designated urban regeneration areas, provided the local municipality formally recognizes and approves the rehabilitation works. This exemption may be renewed in three-year periods, subject to municipal approval.

Additional to IMI (AIMI)

Portugal does not have a classic wealth tax. However, Additional to IMI (AIMI) works very similarly and taxes high-value residential property in Portugal.

AIMI applies to the combined taxable value (VPT) of residential properties and building land located in Portugal. It applies to both residents and non-residents, regardless of nationality.

Individuals benefit from a €600,000 exemption threshold, meaning that AIMI is charged only on the portion of the residential property value that exceeds this amount.

Married couples or civil partners may opt for joint taxation, which increases the exemption threshold to €1.2 million. AIMI will only apply if the combined VPT of their residential property exceeds this amount.

The additional property tax AIMI can be calculated as follows:

Rental Income Taxes in Portugal

As a rule, Portugal taxes rental income from residents and non-residents at 28 percent. For most residential rentals, the rate is 25 percent. Residents can choose to include rental income in their total taxable income in certain situations, which is then taxed at progressive IRS tax rates.

When paying tax on rental income in Portugal, you may qualify for special reductions or exemptions if you meet specific conditions.

Deductions

Landlords may deduct expenses directly related to generating rental income, including:

• Property maintenance and repairs
• Property management fees
• Condominium fees
• Insurance
• Property taxes (IMI)
• Utilities paid by the landlord

To claim these deductions, landlords must provide invoices detailing the work or expenses and the property’s location.

Tax Exemptions

The Portugal rental income tax may be fully or partially exempt under specific circumstances:

1. Income derived from contracts included in the Lease Support Program.
2. Income from accommodation for displaced students, within the program’s maximum affordable rental limits.
3. Income from rental contracts signed before 1990.
4. Income from properties previously used for local accommodation (Alojamento Local), provided that:
   • The property was registered and used for AL by 31 December 2022.
   • The lease contract and registration with Portuguese Finances must have taken place by 31 December 2024.
   • This exemption applies until the end of 2029.

Short-term rentals

If you want to rent out your property for short stays, you need an Alojamento Local (AL) license. Short-term rental income from AL is taxed differently because it is considered a business activity (Category B) rather than simple rental income (Category F).

The Portuguese property market can be profitable. Portugal attracts tourists with its beaches, climate, and rich history. You can stay part of the year and earn passive income from short-term rentals.

Previously, the Mais Habitação package limited the issuance of new AL licenses in areas such as Lisbon, Porto, and the Algarve. The government has now lifted some of these restrictions.

Municipalities can still set their own rules and limits. In high-density areas, like Lisbon, some restrictions may remain. However, AL licenses are transferable, which means you can sell or transfer the license along with the property to a new owner. Working with a local buyer’s agent or a real estate agent can help you choose the best location for new AL registrations.

Long-term rentals

For long-term rentals, you do not need an AL license. Standard lease agreements work for foreign property owners.

Long-term rentals provide a stable income. Leases usually last 12 months or more, attracting digital nomads, students, and professionals. Long-term tenants tend to cause less damage, and maintenance costs are lower. However, rental yields are usually smaller than short-term rentals.

A real estate lawyer in Lisbon can help draft contracts and ensure you follow current legislation.

Note: Portugal plans to charge a flat 7.5 percent IMT (Property Transfer Tax) on homes purchased by non‑residents, with exemptions and refunds available for new tax residents and properties intended for long‑term rentals. But this law is not yet in effect.

Capital Gains Tax on Property in Portugal

Portugal charges Capital Gains Tax (CGT) when you sell a property. How much you pay depends on your residency status and circumstances.

For residents, only 50 percent of the capital gain counts as taxable income. Portugal adds this amount to your other income. The tax is calculated using progressive IRS rates (plus a solidarity rate if applicable).

For non-residents, you also pay tax on 50 percent of the capital gain, using the same progressive IRS rates. This replaced the previous flat 28 percent rate. When managing your Portuguese Capital Gains Tax, we recommend you consult with a tax advisor.

Check our ultimate guide on how to get Portuguese residency.

How capital gains is calculated in Portugal?

The steps to calculate the Capital Gains Tax (CGT) can then be summarized as follows:

Step 1: Calculate the gain

Capital Gain (CG) = Sale Value (SV) – Acquisition Value (AV)

Step 2: Determine taxable gain

Taxable Gain = 50% × CG

Step 3: Apply the tax rate

CGT(T) = Taxable Gain × R

R = progressive IRS rate (12.5 to 48 percent, plus solidarity rate if applicable)

For example, you are a resident who sold your property for €400,000. You bought it for €250,000. Here is how calculating the Capital Gains Tax (CGT) would look in your case:

• Capital Gain = €400,000 – €250,000 = €150,000
• Taxable Gain = 50% × €150,000 = €75,000
• CGT = €75,000 × your progressive IRS rate

Additional rules:

• Residents and non-residents both pay 50 percent of the gain.
• Residents pay only on properties acquired after 1 January 1989.

We’ve created an ultimate guide about Capital Gains Tax in Portugal so you can get all the information you need in one place.

Deductions to Capital Gains Tax in Portugal

When calculating your CGT tax, you can reduce your taxable gain by deducting certain expenses. These include:

• Acquisition costs and purchase taxes
• Renovation and improvement costs
• Legal and real estate fees, real estate agent commissions, and other transaction-related costs
• Capital losses from property sales
• Mortgage or loan-related costs (only in certain cases)
• Primary residence reinvestment: If the sold property is your primary residence, and you reinvest the sale proceeds into another primary residence in Portugal or the EU within 36 months after the sale (or 24 months before), the gain may be fully or partially exempt.

What are gift and inheritance taxes in Portugal?

There is no inheritance tax in Portugal property taxes. It was abolished in 2004 and replaced with a stamp duty (Imposto do Selo). The stamp tax functions like a gift tax, which comes at a flat rate of 10 percent. The stamp duty applies to assets in the Portuguese territory that were passed on as inheritance. However, spouses, children, grandchildren, and parents are fully exempt from the stamp duty tax. This means that for the vast majority of family inheritances, there is no tax to be paid.

Resident vs Non-Resident Property Taxes in Portugal

How to pay property taxes in Portugal as a foreigner?

When you buy property in Portugal as a foreigner, you become a taxpayer. You will need a Portuguese Tax Identification number, known as a NIF, for tax authorities to track your transactions and to pay your taxes. Foreigners usually open a local bank account for lower fees and flexible services.

Getting a NIF in Portugal

The NIF number in Portugal is a nine-digit fiscal number also known as the Número de Identificação Fiscal or Número de Contribuinte. You can obtain it from your local tax office Finances (Finanças). You will use this tax identification number in Portugal to make financial transactions in the country. If you are a non-EU resident, you must have a tax representative to manage the Portugal foreign property tax.

See what you need to know about buying property in Portugal after Brexit, if you are a UK national.

Opening a Portuguese bank account

Although not mandatory, it is recommended that you have a Portuguese bank account to avoid hefty transaction costs and to simplify paying your taxes in the country.

Depending on the bank, you may need the following documents to open a bank account in Portugal:

• Valid proof of ID, such as your passport
• Proof of address (e.g., a recent utility bill or letter with your name and address visible, no older than three months)
• NIF number
• Proof of income or employment (a letter of employment, pay slip, or registration with a Portuguese employment center)
• A minimum cash deposit of €200 to €300 (depending on the bank)
• Some banks may also require that you have a Portuguese phone number for SMS activation (although this may not be required and will depend on the bank)

Work with local experts

Working with a tax expert, a buyer’s agent, and a Portugal real estate lawyer can help you make a smooth and successful property purchase. A buyer’s agent can research the local market and navigate the process of purchasing property, while a lawyer will take care of the legal paperwork at the time of the purchase.

If you need full market access with detailed insight into off-market listings, you can use a property finder in Portugal.

If you are asking yourself, “How long does it take to buy a house in Portugal?”, usually it takes about 1-4 months, depending on the complexities of the process and the date the seller wants to sell the property by. However, working with local experts can significantly cut the time period to secure your new home.

Consult with a fiscal representative

When dealing with tax on vacation homes or real estate investments in Portugal, it is best to consult with a financial expert who can act as your fiscal representative. Hiring a fiscal representative can be free or cost up to €1,500 annually.

A tax representative in Portugal acts as the interface between a non-resident and the tax office on all tax matters, like property buying taxes. If you are a non-resident who owns property in Portugal, has a bank account here, or has any other commercial properties or activity in the country, you must have a fiscal representative that is registered with the tax authorities.

If you are a resident of the European Union (EU) or the European Economic Area (EEA), you do not need a tax representative as long as you choose to receive all tax-related notifications directly from the Autoridade Tributária e Aduaneira (AT).

If you do not choose this option, you must appoint a tax representative to handle tax matters with the tax authorities in Portugal.

Goldcrest: How We Can Help You 

Goldcrest is a buyer’s agent that is based in Lisbon. We provide expert, impartial advice on real estate investments and how to buy property in Portugal. From scouting out the perfect property through to property acquisition, we have you covered throughout the process.

If you are looking to purchase property in Portugal, don’t hesitate to get in touch. Our team of skilled experts is available to solve all your real estate doubts, helping you with the property search and offering insightful expertise and strategic advice.

Why choose Goldcrest?

• Local knowledge: With offices located across Portugal, our presence nationwide allows us to assist you personally across the country.
• Independent service: As an independent buying agent, we do not represent any development or project. Our service is entirely tailored toward each individual client, providing you with everything you need to secure the perfect property at the best possible price. As an impartial advisor on the market, we work solely on behalf of our client and provide a service tailored to your needs and requirements.
• Streamlined process: Our real estate agents speak English and Portuguese, and our service is completely focused on providing you with a hassle-free buying experience, saving you time.
• Experienced team: Our expert real estate team has a vast local knowledge of the Portuguese property market. We have cutting-edge technology and metasearch tools at your disposal to provide full market coverage, ensuring the best investment choices and negotiated prices.
• Network of partners: We have a close network of partners, including lawyers, property management services, builders, architects, designers, and landscape gardeners, again saving you time and hassle by providing you with trusted experts in their field of work.