The cost of living in Portugal in 2025
Discover the cost of living in Portugal: rent, food, healthcare, education.
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.
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:
Here are the key costs to expect when purchasing property in Portugal:
Expense | Details |
---|---|
Translation of documents | If 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 costs | Vary based on the complexity of the deed |
IMI (Property Tax) | Payable for the first time on the full sum |
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:
The IMT is a significant cost when buying property in Portugal. Here’s how it works:
Properties purchased for rehabilitation may also be exempt from IMT, but strict conditions apply.
The Azores and Madeira, as autonomous regions, have different IMT rates:
If you’re buying a house as a secondary residence or holiday home, the rates differ slightly:
In addition to IMT, you’ll need to budget for the following:
Stamp duty (Imposto de Selo):
Deed registration fee: 1% of the property price. While technically not a tax, it’s an obligatory cost.
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.
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.
Payment schedule:
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).
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.
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:
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:
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) |
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.
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:
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.
Portuguese residents can avoid capital gains tax entirely if they meet the following conditions:
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.
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) |