Buying a property in Portugal: all the taxes you need to know before and after the purchase

Taxes on the purchase of a property in Portugal

When you buy a property, several taxes apply as soon as the deed of sale is signed. Their amount varies depending on whether the property is new or old, its price and its purpose. Unyk-Place has deciphered for you the sublitities of the Portuguese tax system to take into account when making your upcoming purchase.

For old properties (resale):

• IMT (Imposto Municipal sobre Transmissões Onerosas de Imóveis): this is the real estate transfer tax. It is progressive, with a rate of between 1% and 8%, depending on the purchase price, the type of property (urban or rural) and its use (main or secondary residence).

• Stamp duty (Imposto do Selo): this applies to all purchases and amounts to 0.8% of the tax value of the good.

For new properties:

• VAT (IVA): it applies to new properties, renovated properties or properties that are part of a tourist program. The rate is 23% in mainland Portugal (22% in Madeira, 16% in the Azores).

• This VAT is usually included in the displayed sales price.

Taxes while holding the property

Once you are the owner, you will have to pay annual taxes related to the possession of your property.

IMI – Municipal Real Estate Tax:

• It works like the property tax or the housing tax.

• The rate varies between 0.3% and 0.8%, depending on the location, age and nature of the property.

• It is calculated on the tax value (often lower than the market value).

AIMI – Additional tax to the IMI (real estate wealth tax):

• Applicable if the tax value of the property exceeds €600,000 for a single person or €1.2 million for a couple.

• Rate: 0.7%.

Tax residency: what you need to know

Owning a property in Portugal does not automatically make you a tax resident. However, certain criteria can change your situation:

• If you spend more than 183 days a year in Portugal, you will be considered a Portuguese tax resident.

• Even if you stay for a shorter period of time, having permanently available housing can also justify this status.

This change of tax residence may have consequences on your taxation, in particular on your worldwide income or in the event of resale.

The Non-Habitual Resident (NHR) Scheme

For newcomers, the NHR regime can offer attractive tax advantages for 10 years.

Benefits of the NHR diet:

• Reduced rate on certain types of foreign income (pensions, dividends, etc.)

• Possible exemption on foreign-source income

• Application under conditions, including not having been a tax resident in Portugal for the last 5 years.

This scheme is particularly popular with retirees and qualified professionals wishing to settle in Portugal.

What has changed since 2023–2024 : The Portuguese tax regime for Non-Habitual Residents (NHR) was replaced in 2024 by a new scheme called the Tax Incentive for Scientific Research and Innovation (IFICI), commonly referred to as NHR 2.0.

• Foreign pensions are no longer exempt as before. They are now taxed at 10% unless you obtained the NHR before the 2020 changes.

• Some advantages on earned income have been restricted, particularly for high value-added professions. A new reform plans to abolish the NHR from 2025, except for applications already validated before that date.

• Exceptions are provided for certain categories (researchers, teachers, etc.).

Points to watch out for when buying

Buying a property in Portugal can involve certain complications if you are not well informed.

Here are the main pitfalls to avoid:

• Properties with unclear or poorly registered legal status

• Debts associated with the property (electricity bills, unpaid taxes, etc.) that can be passed on to the new owner

• Hidden costs: taxes, registration fees, notary and lawyer fees

It is strongly recommended to:

• Work with a reputable real estate agency that clearly displays its AMI license.

• Use an independent local lawyer

• Ask for a complete statement of charges and the situation of the property before buying

• Check that all building or renovation permits are in order

If you're buying a property from abroad, the process can seem complex. To secure your transactions, it’s essential to work with the right professionals. Unyk-Place can be your trusted real estate agency in Portugal: our multilingual, trained, and efficient team supports you every step of the way, in collaboration with a network of reliable partners to provide you with complete and secure guidance.

Frequently Asked Questions

Does becoming a homeowner in Portugal make me a tax resident?
No. You must spend more than 183 days per year or establish your habitual residence there to be considered a tax resident.

Is Portugal tax-advantageous for expats?
Yes, under certain conditions. The NHR regime offers attractive tax advantages, but limited in time. It is advisable to consult a tax advisor to check your eligibility.

Do I have to pay taxes in Portugal even if I don’t live there?
Yes, as a non-resident property owner, you must pay certain taxes such as IMI (municipal property tax) annually. If you rent out the property, you are also required to declare and pay taxes on the rental income in Portugal, even if you live abroad.

What happens if I sell my property in Portugal?
Selling a property can generate a taxable capital gain. Non-residents are generally taxed at a flat rate of 28% on this gain, although tax treaties between Portugal and your country of residence may help you avoid double taxation.

The information provided in this article is for guidance purposes only and does not replace professional advice. As tax regulations may change, we recommend verifying each point with a local expert. If needed, we can connect you with trusted professionals in Portugal.

To better understand the tax framework applicable to real estate in Portugal, it is essential to refer to several key legislative texts. The Municipal Property Tax Code (CIMI) and the Municipal Property Transfer Tax Code (CIMT), both introduced by Decree-Law no. 287/2003, govern, respectively, the annual taxation on property ownership and the tax on property transactions. Additionally, the Personal Income Tax Code (CIRS) applies to rental income and capital gains for individuals, while the Corporate Income Tax Code (CIRC) covers companies that own real estate assets. Law no. 7-A/2016 introduced the AIMI, an additional property tax for high-value estates. Finally, the Notarial Code and the Land Registry Code regulate the formalities of registering property transactions, and the annual State Budget Laws, along with various ministerial decrees, regularly update these rules, especially regarding exemptions, rates, and tax incentives for urban rehabilitation areas.