Portugal – Property Taxes

What taxes and fees apply when buying a property in Portugal?

When you purchase real estate in Portugal, a number of upfront costs fall to the buyer. The two largest are the property transfer tax (IMT) and stamp duty (Imposto do Selo). Beyond these, notary charges, land registry fees, and — where a newly built property is involved — VAT all contribute to the overall acquisition cost. Buyers should set aside roughly 6–10% of the purchase price to cover these transaction expenses in their entirety.

Property Transfer Tax (IMT)

IMT (Imposto Municipal sobre Transmissões Onerosas de Imóveis) is the municipal tax triggered whenever real estate changes hands in Portugal. The amount owed is determined by the property’s intended use and its value, with the calculation based on whichever is higher — the official tax value (VPT) or the declared purchase price. Payment must be made by the buyer before the final sale agreement is executed.

Those purchasing a home as their principal place of residence benefit from the most favourable IMT treatment. In 2025, the opening €104,261 of a property’s value is entirely exempt from IMT on the Portuguese mainland (a threshold that stood at €101,917 in 2024), meaning a good number of lower-priced homes attract no IMT at all. Buyers in Madeira and the Azores enjoy a higher exemption of up to €130,326.

Above these thresholds, IMT applies on a progressive basis for most residential purchases, with the rate climbing across bands as the property value increases. Certain property categories and high-value transactions are instead subject to flat rates. Rural properties attract a fixed 5% rate; commercial real estate is charged at a flat 6.5% irrespective of location. Where the taxable value falls between €324,058 and €648,022, a marginal rate of 8% applies.

For second homes and investment properties, the primary residence exemption is unavailable. A flat rate of 1% applies to values up to €101,917, with progressive rates kicking in above that. Properties valued above €1 million are subject to a flat 7.5% rate. Because thresholds are revised each year, always confirm the latest figures with the Portuguese Tax and Customs Authority (Autoridade Tributária e Aduaneira — AT) or seek advice from a qualified solicitor.

Worked example: IMT on a €300,000 primary residence (2025)

Take an urban apartment in Lisbon purchased for €300,000 as a permanent home. Falling within the band running from €203,168.01 to €304,752, which carries a 7% rate less a fixed deduction of €10,096.72, the IMT calculation would be approximately: (€300,000 × 7%) − €10,096.72 = €10,903.28. These band figures are illustrative for 2025 and should always be confirmed with an authoritative source or a solicitor before proceeding.

Stamp Duty (Imposto do Selo)

On top of IMT, stamp duty is charged at 0.8% on the same value used for the IMT computation. Where the purchase is funded in part by a mortgage, a further 0.6% stamp duty applies to the loan amount (or 0.5% where the repayment term is five years or less). Stamp duty rates are consistent across the country and do not vary by region.

Notary, registration fees, and VAT on new builds

A deed registration fee of approximately 1% is also payable. The notary public (cartório notarial) who presides over the deed charges a fee that generally falls between a few hundred and upwards of €1,000, depending on the property’s value and the complexity of the transaction; always obtain a written estimate in advance. For newly constructed properties, VAT is charged at 19% and is ordinarily incorporated into the advertised price — confirm this before contracts are signed, however, as VAT can materially inflate the total cost of acquisition.

As a broad rule: all taxes and fees associated with the purchase — IMT, stamp duty, registration costs, and notary charges — are the buyer’s responsibility. The seller does not typically bear IMT or stamp duty on the transaction itself but faces separate costs on the disposal side (see the selling section below). For most residential purchases, IMT rates are identical for residents and non-residents alike, though a proposed flat 7.5% IMT rate targeting non-resident buyers is currently under discussion (see the foreign nationals section for further detail).

What taxes and fees apply when selling a property in Portugal?

Selling property in Portugal does not expose the seller to IMT or stamp duty, but there are other significant financial considerations. The primary concern for sellers is capital gains tax (addressed in full in the following section), along with estate agent commissions and legal costs. Together these can noticeably erode net sale proceeds, so it pays to plan well ahead.

Estate agent commission

Estate agent (imobiliária) fees are not set by law in Portugal and can be negotiated, but in practice they typically land between 3% and 5% of the agreed sale price, with VAT at 23% added on top. The commission is almost universally borne by the seller rather than the buyer. Make sure you clarify whether the quoted fee is inclusive or exclusive of VAT in your agency agreement before appending your signature.

Legal fees

Most sellers engage a lawyer (advogado) or solicitor (solicitador) to scrutinise the promissory contract (contrato de promessa de compra e venda) and manage the deed process through to completion. Legal fees typically fall in the range of 1%–2% of the property’s value, though they can vary. These costs, together with agent commissions and any notary expenses, may be treated as deductible expenditure when computing the capital gain (see below).

Energy performance certificate

Portuguese law requires sellers to obtain and provide a valid Energy Performance Certificate (Certificado Energético) before the property can be marketed. These certificates are issued by accredited specialists and typically cost between €150 and €400, depending on the size and location of the property. Failing to supply one may delay proceedings or even jeopardise the sale.

Interaction with capital gains tax

The taxable capital gain is arrived at by deducting allowable costs from the difference between the sale price and the original acquisition price. Eligible deductions include documented renovation expenditure, estate agent commissions, legal fees, and other verifiable transaction costs. This means that careful record-keeping throughout the period of ownership can have a meaningful impact on the final tax bill.

How does capital gains tax work on property in Portugal?

Rather than operating a freestanding capital gains tax, Portugal folds property profits into the Personal Income Tax (IRS) framework. Since 2023, the rules have been harmonised for residents and non-residents alike, giving Portugal’s approach a degree of clarity — though the precise liability is heavily influenced by the seller’s total income in the year of disposal.

How the gain is calculated

The capital gain is the profit realised on a sale — broadly, the difference between what was paid for the property and what it is sold for. Certain costs may be subtracted when arriving at the taxable gain, including renovation expenditure, estate agent fees, notary charges, and the transfer taxes paid on acquisition. Renovation costs qualify as a deduction provided the works are substantiated by invoices issued within the past 12 years under the seller’s tax number. Where the property has been held for more than two years, an inflation adjustment coefficient may further reduce the taxable amount.

The 50% rule and progressive rates

Portugal does not tax the entire gain. Only half — 50% — of the capital gain is brought into charge, and this rule applies equally to residents and non-residents. That taxable portion is added to the individual’s total annual income and assessed at the applicable progressive income tax rates, which run from roughly 14% to 48%. The effective tax rate on property gains therefore typically falls somewhere between 0% and 24%, depending on total income in the relevant year.

Treatment of non-residents

With effect from 1 January 2023, non-residents selling Portuguese property are subject to the same rules as residents: only 50% of the profit enters the tax calculation, and the rate reflects the individual’s total worldwide income. In 2025, Portugal’s income tax bands range from approximately 12.50% to 48%, and property gains are assessed within those bands after being combined with other earnings. This represents a considerable improvement on the prior regime, under which non-residents paid a flat 28% on the full gain.

Worked example (2025)

Suppose a non-resident realises a capital gain of €100,000 on the sale of a Portuguese property in 2025. Only €50,000 is taxable. If that individual’s other worldwide earnings amount to €90,000, total income for bracket purposes comes to €140,000, attracting the 48% top rate: the resulting tax on the €50,000 taxable gain is €24,000. Under the previous regime, the same seller would have faced a €28,000 bill (28% × €100,000).

Key exemptions

Tax residents may qualify for a full or partial exemption where the property sold was their primary residence within the preceding 12 months and the net sale proceeds — after discharging any outstanding mortgage on that property — are reinvested in acquiring, improving, or constructing another primary residence in Portugal or elsewhere within the EU, within 36 months following the sale (or within the 24 months prior to it).

Sellers aged 65 or over can alternatively reinvest proceeds from the disposal of any property — primary or otherwise — into a qualifying life assurance policy or pension fund within six months of the sale to sidestep capital gains tax entirely. Properties acquired before 1 January 1989 remain entirely exempt from capital gains tax. Always confirm the precise conditions of any exemption with the Autoridade Tributária e Aduaneira (AT) or a qualified tax professional before relying on it.

Are there any ongoing annual property taxes in Portugal?

Portugal imposes an annual municipal property tax (IMI) on all property owners, irrespective of where they are resident. Those holding more substantial real estate portfolios may additionally face the AIMI surcharge, which functions effectively as a property wealth tax. Both charges are computed by reference to the property’s official assessed value (VPT) rather than its open-market price, which often results in annual bills that are more modest than property owners accustomed to other systems might anticipate.

IMI — Imposto Municipal sobre Imóveis

IMI is an annual tax paid by property owners to their local municipality — broadly comparable to council tax or property rates found in other jurisdictions. Revenue raised funds local services and infrastructure. The charge is calculated by multiplying the property’s VPT by the applicable municipal rate. VPT is periodically reassessed by the tax authorities on the basis of factors including construction type, age, location, and available amenities.

Each municipality sets its own IMI rate each year within the limits prescribed by central government. For 2025, urban property rates generally range between 0.3% and 0.45%, while rural properties carry a fixed rate of 0.8%. Lisbon, for instance, applies a rate of 0.3%, while Porto’s rate sits at around 0.324%. In contrast to the US model — where property tax is typically levied on market value and can reach 1%–2% or more — Portugal’s IMI is applied to the lower VPT figure, so effective bills tend to be relatively contained.

The VPT is usually considerably below the open-market value, often by a factor of three to four. An apartment selling at €400,000 on the open market might carry a VPT of €100,000–€150,000, translating into an IMI bill of €300–€675 per year at a rate of 0.3%–0.45%.

IMI payment schedule

Where the total IMI bill does not exceed €100, it falls due in a single payment in May. Bills between €100 and €500 inclusive are split across two instalments, payable in May and November. Amounts above €500 are divided into three instalments due in May, August, and November respectively. The Portuguese tax authority dispatches payment notices by 30 April each year, either by post or via its electronic notification system.

IMI exemptions

Urban properties used as a permanent residence are exempt from IMI for up to three years from the date of acquisition, provided the property’s tax value does not exceed €125,000 and the household’s annual income remains below €153,300 (verify current thresholds with the AT, as these are subject to change). Properties aged over 30 years or situated within a designated Urban Rehabilitation Area (ARU) that meet specific requirements may also receive an IMI exemption for three years following completion of rehabilitation works, with the possibility of a further five-year extension.

AIMI — the property wealth surcharge

Individuals or entities holding a significant portfolio of Portuguese real estate may be subject to the Adicional ao IMI (AIMI), an additional wealth-based levy on the aggregate VPT of all urban residential properties and land held for construction. In 2025, individuals benefit from a deductible allowance of €600,000. AIMI is then charged at 0.7% on taxable value between €600,000 and €1,000,000, at 1% between €1,000,000 and €2,000,000, and at a marginal rate of 1.5% on any amount exceeding €2,000,000.

Married couples or those in a formally recognised civil partnership may elect joint assessment, effectively doubling the personal allowance to €1,200,000. The Portuguese Tax Authority calculates AIMI each June, with payment falling due in September. To counter offshore avoidance, a punitive surcharge of 7.5% is levied on properties held by entities registered in jurisdictions on Portugal’s blacklist of tax havens.

How does inheritance tax apply to property in Portugal?

Portugal stands apart from many of its European neighbours in that it has no conventional inheritance tax or estate duty of the kind found in countries such as France, Germany, or the United Kingdom. That said, inheriting property in Portugal is not entirely free of tax consequences — stamp duty applies to the transfer, and the treatment varies considerably depending on how closely the heir is related to the deceased.

Stamp duty on inherited property

Because Portugal does not levy a dedicated inheritance tax, stamp duty (IS) is the mechanism through which the transfer of inherited property is taxed. Where a property passes to a spouse, children, parents, or grandparents of the deceased, the stamp duty rate is 0.8%, applied to the VPT of the property. In all other circumstances — more distant relatives, friends, unmarried partners whose relationship has not been formally recognised, or unrelated beneficiaries — the rate rises sharply to 10%. Unlike the UK inheritance tax system, there are no graduated allowances or nil-rate bands beyond this basic distinction.

In practical terms, a surviving spouse or adult child inheriting a property will face a relatively small stamp duty bill, while a friend or remote relative inheriting the same asset would face a charge more than twelve times as large.

Non-resident heirs

Where a property situated in Portugal is inherited by a non-resident, Portuguese stamp duty applies to the transfer regardless. Real estate income and gains are taxed in the country where the asset is located, and this principle extends to succession. Non-resident heirs would be well advised to appoint a Portuguese tax representative (fiscal representative) and should also investigate their obligations in their own country of tax residence — the interaction between Portuguese succession rules and local laws can become complex very quickly. Specialist guidance from both a Portuguese notary (notário) and an international tax adviser is strongly recommended in these circumstances.

EU Succession Regulation

Residents of EU member states should be aware of EU Succession Regulation No. 650/2012, which permits individuals to elect for their national law to govern the succession of their estate across borders. This election can influence which country’s rules determine how Portuguese real estate is passed on. Confirm the implications with a qualified notary or the Autoridade Tributária e Aduaneira.

How does gift tax apply to property transfers in Portugal?

Portugal abolished its gift tax in 2004, so there is no separate charge levied on property transfers between living individuals. However, stamp duty applies to gifted property in precisely the same manner as it does to inherited property, meaning the tax treatment is broadly equivalent whether the transfer takes place during the owner’s lifetime or upon death.

Stamp duty on gifted property

As no gift or inheritance tax exists in Portugal, stamp duty serves as the charge on gratuitous property transfers. Where the recipient is the donor’s spouse, child, grandchild, or parent, a stamp duty rate of 0.8% applies to the VPT of the property being transferred. In every other case, the rate is 10%. By way of illustration, gifting a property with a VPT of €200,000 to an adult child would attract just €1,600 in stamp duty, whereas the same transfer to a more distant relative or a friend would generate a €20,000 liability.

Capital gains implications for the donor

A property gift is treated as a disposal for capital gains purposes under Portuguese law. The donor may consequently be liable to income tax (IRS) on any appreciation in the property’s value since acquisition, with the VPT at the date of transfer used as the deemed sale price. This is a frequently overlooked cost that can make gifting considerably less tax-efficient than it appears at first glance. Taking advice from a tax professional before proceeding with a property gift is therefore essential.

Non-resident donors and recipients

Portuguese stamp duty applies to transfers of Portuguese real estate regardless of whether the donor, the recipient, or both are non-resident. It is worth bearing in mind that stamp duty also extends to other property-related transactions such as mortgages and gifts. Recipients who are tax resident outside Portugal may also be required to declare the gift to the tax authorities in their country of residence, and some jurisdictions apply their own gift or succession tax rules to foreign assets received. Always verify current obligations with the Portuguese Tax Authority and a local adviser before proceeding.

How is rental income from property taxed in Portugal?

Rental income arising from Portuguese property is subject to tax in Portugal regardless of where the landlord resides. Both long-term residential lets and short-stay tourist rentals must be declared to the authorities. The applicable rate and the method of calculation differ according to the landlord’s tax residency and the nature of the rental arrangement — and certain registration and licensing obligations must be met before a property may lawfully be let out.

Tax rates for residents

Resident landlords are taxed on rental income at the progressive income tax rates, which run from 14% to 48% depending on total annual income. Rental receipts are aggregated with other income streams and charged at the marginal rate that applies to the combined figure. In certain circumstances, resident landlords may alternatively elect a flat withholding rate — consult the AT portal or a tax adviser for the options currently available.

Tax rates for non-residents

Non-resident individuals are subject to a flat 28% rate on net rental income, generally withheld at source. A reduced rate of 25% applies to residential properties used for long-term housing, though a 28% rate may be applicable in specific situations such as corporate or rural lettings. Non-resident landlords are obliged to appoint a Portuguese fiscal representative and must register their rental activity with the AT.

Allowable deductions

Taxable rental income is determined after deducting allowable expenses from gross rent. These include costs of maintenance and repairs, insurance premiums, and the annual municipal property tax (IMI). Mortgage interest, however, is not a deductible expense. Property management fees are also generally deductible where they are properly documented. Maintaining comprehensive records and retaining invoices is essential, as all deductions must be substantiated and declared through the annual IRS return.

Short-term and tourist rentals (Alojamento Local)

Rental of furnished property for tourist accommodation purposes falls within the Alojamento Local (AL) regime. VAT at 6% may apply where annual turnover exceeds €10,000, and a simplified tax regime is available for landlords with annual revenue up to €200,000. Before accepting any bookings, landlords must register the property with the relevant local authority (câmara municipal) and obtain an AL licence. Regulation governing AL properties has tightened considerably in recent years, particularly in designated urban pressure zones.

Example calculation — non-resident long-term landlord

A non-resident landlord collects €18,000 per year in gross rental income. Allowable deductions total €2,950, comprising maintenance (€1,200), insurance (€400), IMI (€450), and property management fees (€900). Net taxable income is therefore €18,000 − €2,950 = €15,050. At the flat 28% rate, the Portuguese tax due amounts to €4,214. The landlord should additionally consider whether a double taxation treaty between Portugal and their country of residence reduces or offsets this liability domestically.

Double taxation treaties

Foreign landlords may also face a tax obligation in their home country on the same rental income. Where a double taxation treaty is in force, they will typically pay only the excess, if any, should their home country’s rate be higher than Portugal’s. Portugal maintains an extensive network of double taxation agreements. Review the AT’s treaty list or engage an international tax adviser to understand how your specific situation is treated.

Are there any tax advantages or incentives for buying property in Portugal?

Portugal provides a range of targeted incentives capable of meaningfully reducing the cost of purchasing and holding real estate. These span exemptions for younger first-time buyers, relief aimed at encouraging historic property rehabilitation, and the revised NHR 2.0 regime for skilled professionals. Not every incentive is open to non-residents, and the conditions attached to each change regularly, so verifying eligibility before relying on any benefit is essential.

Young first-time buyer exemption

A new incentive introduced in mid-2024 relieves young adults of IMT when buying their first home as a primary residence. Buyers aged 18–35 purchasing their first principal home pay no IMT on properties valued up to €324,058. For properties priced between €324,058 and €648,022, a reduced IMT rate of 8% applies together with a tax reduction of €25,924.64. An accompanying stamp duty exemption is also available to these buyers. The incentive is designed to assist first-time purchasers and applies only where the deed is completed on or after 1 August 2024.

Urban rehabilitation exemptions

Purchasers of eligible older properties intended for rehabilitation may benefit from a reduced VAT rate of 6% on the rehabilitation works themselves, as well as an IMT exemption or refund. To qualify, the property must be more than 30 years old or lie within a designated Urban Rehabilitation Area (ARU), must be occupied as the owner’s permanent home or let on a long-term basis, and rehabilitation works must commence within three years of acquisition. Rehabilitated properties may also attract a 3–5 year IMI exemption, depending on the nature of the works carried out.

NHR 2.0 — Non-Habitual Resident tax regime

The NHR 2.0 regime, which superseded the original NHR scheme in 2024, offers qualifying skilled professionals a reduced 20% income tax rate on Portuguese-sourced earnings. Those in all other occupational categories remain subject to the standard progressive system. Beneficiaries must maintain Portuguese tax residency throughout the entire ten-year period and satisfy the relevant eligibility criteria each year. While NHR 2.0 does not directly lower property purchase taxes such as IMT or IMI, it can substantially reduce the income tax burden on rental income and other Portuguese-sourced earnings for those who qualify.

Golden Visa — real estate no longer eligible

Since late 2023, property investment no longer constitutes an eligible route for obtaining a Golden Visa anywhere in Portugal, including Lisbon, Porto, Madeira, and the Azores. Alternative qualifying pathways — such as investment fund subscriptions or donations to cultural projects — continue to be available. This is a significant development for anyone who had previously intended to combine a property purchase with a residency-by-investment application.

IMI exemptions for lower-income households

A permanent IMI exemption exists for households with lower incomes. Eligibility requires that the household’s annual taxable income does not surpass €15,295 and that the property serves as the owner’s permanent home with a tax value below a specified ceiling. Confirm the current income and value thresholds with the AT, as these parameters are subject to annual review.

What are the tax implications for foreign nationals buying property in Portugal?

Portugal imposes no legal barriers on foreign nationals purchasing property, but there are specific tax duties and practical matters that buyers from outside the country need to fully understand. From the requirement to hold a Portuguese tax number to proposed changes affecting non-resident purchasers, the landscape has shifted considerably in recent years.

No restrictions on foreign ownership

Foreign nationals may purchase property in Portugal without any restrictions. The buying process is essentially the same for residents and non-residents and applies equally to those from EU and non-EU countries. The prerequisites are straightforward: a Portuguese tax identification number (NIF), a local bank account, and compliance with the relevant legal and tax procedures.

The NIF requirement

Every person buying property in Portugal — resident or not — must hold a NIF (Número de Identificação Fiscal), issued by the AT. Non-resident buyers who have not yet established residency in Portugal can only obtain a NIF through a tax representative — someone who holds Portuguese residency or citizenship. That representative also handles the submission of annual tax returns and any communications with the AT on the non-resident’s behalf.

Proposed flat IMT rate for non-residents

The Portuguese government announced a flat 7.5% Municipal Property Transfer Tax (IMT) on most home purchases by non-residents. The measure was first announced by the Prime Minister on 25 September 2025. The bill creates an important exemption for homes acquired for long-term rental: properties are excluded from the flat non-resident IMT rate if they are intended for residential rental with a monthly rent that does not exceed the moderate rent ceiling, are placed on the rental market within six months of purchase, and are rented for at least 36 months during the first five years after acquisition. As of December 2025, the changes remain subject to parliamentary approval and subsequent implementation by the government. Prospective non-resident buyers should monitor developments closely and verify the current position with a qualified Portuguese property lawyer before committing to a purchase.

Annual property taxes — same for all owners

Tax residency affects some property-related charges but not all. The rates for IMI and the AIMI wealth surcharge are the same whether the owner lives in Portugal or not. Non-resident and foreign buyers are therefore liable for the same ongoing property taxes as residents, regardless of whether the property is a holiday home, an investment letting, or a principal residence.

Double taxation treaties and home-country obligations

Capital gains and real estate income are taxed in the country where the property is situated. However, many countries also require their residents to declare foreign rental income or capital gains locally. Portugal’s wide network of double taxation treaties generally prevents the same income from being taxed twice, but the interplay between the two systems can become complicated. Consult a tax adviser with experience of both Portuguese and your domestic tax rules — particularly where property gains, rental income, or inheritance are involved.

Step-by-step: how to buy property in Portugal as a foreign national

1. Obtain a NIF — Apply at a Portuguese tax office (Finanças) or through a tax representative if you are not yet resident in Portugal. This is the first and indispensable step before any purchase can proceed.
2. Open a Portuguese bank account — Required for processing the transaction and settling tax liabilities. Most banks require the applicant to attend in person or provide a notarised power of attorney.
3. Appoint a lawyer — Engage an independent Portuguese lawyer to carry out due diligence on the property (covering title, encumbrances, and planning status) and to review the promissory contract.
4. Sign the promissory contract (CPCV) — A legally binding agreement accompanied by a deposit of typically 10–30% of the purchase price. Should the buyer withdraw, the deposit is forfeited; if the seller withdraws, they must return double the deposit.
5. Pay IMT and stamp duty — Both must be paid at a tax office or through the AT’s online portal before the final deed is executed. Retain the receipts, as they form part of your deductible acquisition costs for any future capital gains calculation.
6. Sign the final deed (Escritura) — Executed before a notary public, at which point the outstanding balance of the purchase price is transferred.
7. Register the property — Your lawyer registers the transfer at the Land Registry (Conservatória do Registo Predial) and notifies the tax authorities. Registration fees are payable at this stage.
8. Appoint a fiscal representative (if remaining non-resident) — Non-resident property owners are required to have a fiscal representative in place to manage ongoing Portuguese tax obligations on their behalf.

Frequently asked questions: property taxes in Portugal

Do I pay capital gains tax if I sell my Portugal property as a non-resident?

From 1 January 2023 onwards, non-residents selling property in Portugal are treated the same as residents for capital gains purposes: only 50% of the profit is subject to tax, and the applicable rate is determined by the individual’s total worldwide income. This replaced the old flat 28% rate levied on the entire gain. Always confirm the current rules with the Autoridade Tributária e Aduaneira or a qualified tax adviser, as the position may have changed.

Is there a wealth tax on property in Portugal?

AIMI (Adicional ao Imposto Municipal sobre Imóveis) functions as an annual property wealth tax, assessed on the total VPT of all urban residential property held. Individuals pay 0.7% on portfolio value exceeding €600,000, rising to 1% beyond €1 million. Couples opting for joint assessment effectively double the threshold to €1.2 million. Verify current figures with the AT.

Can I deduct mortgage interest on rental income in Portugal?

Mortgage interest is not an allowable deduction when computing taxable rental income in Portugal. Permissible expenses do, however, include maintenance and repair costs, insurance premiums, the annual municipal property tax (IMI), and property management fees, provided all are properly documented.

How much should I budget for buying costs on top of the property price?

As a working guide, allow an extra 6–10% of the purchase price to cover IMT, stamp duty (0.8%), notary fees, registration costs (approximately 1%), and legal expenses. The precise total depends on whether the property will serve as a primary or secondary residence, the purchase price, and whether any IMT exemptions are applicable. Use the AT’s online calculators and always seek confirmation from your lawyer before exchanging contracts.

Do I need to pay tax in Portugal if I rent out my property as a holiday let?

All rental income generated from Portuguese property is taxable in Portugal, whether the letting is on a short-term or long-term basis. Furnished properties let for tourist accommodation are taxed under the Alojamento Local (AL) regime. Landlords must obtain an AL licence and comply with local municipal regulations before accepting any bookings. VAT may be applicable where annual revenue exceeds €10,000 (as of 2025). Consult the AT and a local tax adviser for guidance specific to your situation.

Does Portugal have an inheritance tax on property?

Portugal levies no inheritance or gift tax in the conventional sense. Instead, stamp duty is applied to inherited property transfers. Where the property passes to a spouse, children, grandchildren, or parents of the deceased, stamp duty is charged at 0.8%. For all other beneficiaries, the rate is 10%. These rules apply regardless of whether the heir is resident in Portugal or abroad.

Are the property taxes different in the Azores and Madeira?

For IMT purposes, the primary residence exemption applies up to €130,326 in both the Azores and Madeira, compared with €104,261 on the mainland in 2025. The generally lower property values in these regions also mean reduced exposure to the AIMI surcharge, and IMT brackets are adjusted upward so that many buyers benefit from a lower purchase tax charge overall. Both regions also apply a 30% IMI reduction. Confirm current rates with the relevant regional tax authorities, as the autonomous regions are empowered to set locally adjusted rates.

What is the NHR 2.0 regime and does it help with property taxes?

Portugal’s NHR 2.0 programme offers significant income tax relief to highly qualified professionals who become resident in Portugal, providing a reduced flat rate of 20% on Portuguese-sourced earnings. All other professions continue to be taxed on the standard progressive basis. Although NHR 2.0 does not directly reduce IMT or IMI, it can considerably lower the income tax exposure on rental income for those who are eligible. Speak to a qualified Portuguese tax adviser to assess whether the scheme suits your circumstances and whether the potential savings outweigh the costs of applying.