Complete guide to property taxes in Portugal in 2025

Portugal’s property market has become a hotspot for international buyers, but navigating the country’s property taxes can be complex. This guide breaks down all the taxes you’ll encounter as a property owner in Portugal, with insights into exemptions, deductions, and key rules for EU/EEA residents.

If you're buying a holiday home in Portugal, you’ll contribute to the Portuguese treasury through various property taxes. While taxes in Portugal are generally manageable, it's essential to account for them in your budget—especially when considering ongoing running costs.

Residency and taxation

If you’re not planning to move to Portugal full-time, you’ll be taxed as a non-resident. To qualify as a resident for tax purposes, you must either:

  1. Spend more than 183 days in a calendar year in Portugal, or
  2. Have your Portuguese property as your primary residence (e.g., if you travel extensively and don’t have another permanent home).

Expenses when buying a house in Portugal

Here are the key costs to expect when purchasing property in Portugal:

ExpenseDetails
Translation of documentsIf not already completed
Property Transfer Tax (IMT)Rates depend on the property value
Stamp Duty Tax (0.5%–0.8%)Based on property transaction value
Deed registration fee (1%)Applicable to the property value
Notary costsVary based on the complexity of the deed
IMI (Property Tax)Payable for the first time on the full sum

Taxes when you buy the property

Portugal's property transfer taxes place it among the higher-cost jurisdictions in Europe — slightly below Spain but above France.

The primary tax you’ll encounter when purchasing a house in Portugal is the Property Transfer Tax (Imposto Municipal sobre a Transmissão Onerosa de Imóveis or IMT). The amount of IMT you’ll pay depends on the following criteria:

  • Type of property: Whether the property is classified as urban or rural.
  • Location: Whether the property is on the mainland or in an autonomous region (such as Madeira or the Azores).
  • Purchase purpose: Whether the property will be used as a primary residence or as a second home.

Property transfer tax (IMT) in Portugal

The IMT is a significant cost when buying property in Portugal. Here’s how it works:

  • For rural property, a flat rate of 5% applies.
  • For urban property, the standard rate is 6.5%, unless the property is for residential purposes, in which case tiered rates apply.

Tiered rates for residential properties (mainland Portugal):

  • Permanent main residences:
    • No tax for properties valued up to €92,407.
    • 2% for properties valued between €92,407 and €126,403.
    • 5%–8% for higher values, depending on the price bracket.
    • A 6% flat rate applies to properties valued at €574,323 or more.

Properties purchased for rehabilitation may also be exempt from IMT, but strict conditions apply.

Property transfer tax in autonomous regions (Azores and Madeira):

The Azores and Madeira, as autonomous regions, have different IMT rates:

  • No tax for properties priced below €115,509.
  • 2% for properties priced between €115,509 and €158,004.
  • 5% for properties up to €215,435.
  • 7%–8% for properties valued between €215,435 and €717,904.

Secondary residences or holiday homes

If you’re buying a house as a secondary residence or holiday home, the rates differ slightly:

  • 1% for properties priced below €92,407 in mainland Portugal or €115,509 in the autonomous regions.
  • All other IMT rates remain the same as for permanent residences.

Additional taxes and fees

In addition to IMT, you’ll need to budget for the following:

  • Stamp duty (Imposto de Selo):

    • 0.8% of the property price if no financing is involved.
    • 0.5%–0.6% for properties financed by a mortgage:
      • 0.5% for loans repaid within 5 years.
      • 0.6% for loans with a repayment period exceeding 5 years.
  • Deed registration fee: 1% of the property price. While technically not a tax, it’s an obligatory cost.

VAT on new properties

For new properties, VAT at 19% applies. This is usually included in the advertised price, but you should confirm this to avoid unexpected costs—double-checking could save you thousands of euros.

Ongoing taxes: IMI and AIMI

Once you own a property in Portugal, you’ll be responsible for paying local property taxes. The main tax is the IMI (Imposto Municipal sobre Imóveis), which is calculated as a percentage of the property’s tax valuation (valor patrimonial tributário). You are liable for the tax if you own the property on the last day of the tax year.

IMI rates and payment schedule:

  • Urban properties: IMI ranges from 0.3%–0.4%, depending on the municipality.
  • Rural properties: IMI is set at a flat rate of 0.8%.

Payment schedule:

  • IMI is generally paid in April.
  • For amounts larger than €250, you can split payments into two installments.
  • If the total exceeds €500, it can be divided into three monthly payments.

Additional property tax (AIMI)

If your urban property has a tax valuation exceeding €600,000 (€1.2 million for couples filing jointly), you’ll also pay an Additional Property Tax (Adicional ao IMI or AIMI).

  • AIMI is essentially a wealth tax applied at 0.7% of the property’s value above the threshold.
  • AIMI is payable in addition to regular IMI.

Special tax rates for blacklisted tax havens

Portugal imposes a higher rate of property tax on properties owned by residents of blacklisted tax havens, such as Bermuda, Barbados, Monaco, Andorra, or the Cayman Islands.

If you reside in a blacklisted jurisdiction, it may be more advantageous to purchase and hold the property through an EU-domiciled company to avoid these higher rates. This strategy can help minimize tax liabilities, but professional advice is strongly recommended.

Tax on rental income

If you rent out your holiday home in Portugal, you’ll need to pay tax on your rental income to the Portuguese authorities. Here are the key points to consider:

  • Flat tax rate: Rental income is taxed at 28% for non-residents.
  • Deductions: While mortgage payments cannot be deducted, you can subtract the following expenses:
    • Maintenance and repair costs
    • Insurance premiums
    • Local property taxes (IMI)
    • Property management fees

Double taxation considerations

You’ll also be liable for tax on your rental income in your home country. However, under most double taxation treaties, you won’t pay tax twice. Instead, if your home country’s tax rate is higher than Portugal’s 28%, you’ll only need to pay the difference.

For example:

  • If your home country charges 30% tax on rental income, you’ll pay 28% in Portugal and the remaining 2% at home.
All yearly payments for a property owner
IMI (0.3%–0.8% depending on property type and location)
Insurance (varies based on coverage)
Condominium fees (if applicable)
Property management fees (if applicable)
Utilities (electricity, water, gas – typically up to €100/month)

How to qualify for IMI exemptions?

Tax benefits for property owners

Portugal offers several tax benefits for property owners, particularly for those in specific circumstances:

  • Low-income households:
    If your annual income is less than €15,295 and the property value is no more than €66,500, you’ll benefit from reduced tax liabilities. Note that your tax address must match your property address, making this benefit primarily available to residents.

  • IMI exemption for primary residences:
    For those buying a primary residence in Portugal, you may qualify for 3 years of IMI exemption, a great incentive for people relocating to the country.

  • Urban rehabilitation exemption:
    Properties undergoing urban rehabilitation can be exempt from IMI for 3 to 5 years during the rehabilitation period, depending on the scope and timeline of the project.

  • Investment Support Tax Regime:
    Companies operating under this regime can enjoy 10 years of IMI exemption, offering substantial savings for businesses making long-term investments in Portugal.

Tax when you sell the property

When you sell a property in Portugal, you’ll be subject to capital gains tax on your profit. The rules differ based on residency status:

  • Non-residents: Pay a flat 28% tax on the entire profit.
  • Portuguese residents: Pay tax on 50% of the total gain, with the amount taxed at their marginal income tax rate (which ranges from 14.5% to 48%).

Special rule for EU/EEA residents

If you are a resident of the EU/EEA, you have the option to be taxed under the Portuguese system. This means you’ll only pay tax on 50% of the total gain at Portuguese income tax rates. However, this choice requires including your worldwide income to determine your applicable tax rate.

This option may benefit you if the sale represents the majority of your annual income. However, if you have other significant income (such as earnings, dividends, or capital gains from shares or a business sale), it could result in a higher overall tax rate than the flat 28%. Be sure to calculate carefully and seek advice from a tax specialist if unsure.

Reinvestment exemption for Portuguese residents

Portuguese residents can avoid capital gains tax entirely if they meet the following conditions:

  • The sale involves their primary residence.
  • They reinvest all the proceeds into another EU/EEA property intended as their main home.

If the new property is purchased at a lower price, the difference between the sale price and the new purchase price will be subject to tax.

The bright side of taxes in Portugal

Whatever type of property you buy or sell, the Portuguese government ensures your taxes contribute to the perks of living in Portugal — sunny weather, great wine and food, stunning scenery, and a vibrant culture that knows how to throw a party!

Expenses when you sell a house in Portugal
Capital gains tax (up to 28% for non-residents or based on income for residents)
Agency fees (typically 5%–7% of the sale price, plus VAT)
Land certificate (if not already prepared) – €30
Building register€10
Energy certification (cost varies by municipality; it’s helpful to have this ready when purchasing the property)