Buying a home in Portugal comes with a few important tax steps, both at the moment of purchase and throughout the years you own the property. Understanding these costs upfront helps buyers avoid surprises and plan their investment with confidence. 

From transfer taxes to annual ownership charges, here’s a clear look at what you can expect when entering the Portuguese real estate market.

Property Taxes in Portugal

When you own, buy, sell, rent, or inherit a property in Portugal, it’s important to understand the different taxes involved and how to comply with the Portuguese tax authorities. The main property-related taxes you should be aware of are:

  1. Property Transfer Tax (IMT)
  2. Stamp Duty
  3. Annual Municipal Property Tax (IMI)
  4. Wealth Tax (AIMI)
  5. Rental Income Tax
  6. Capital Gains Tax
  7. Inheritance Tax
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Taxes When Buying Property in Portugal

Property Transfer Tax (IMT)

The Municipal Property Transfer Tax (IMT) is a one-time tax paid by the buyer when purchasing property in Portugal. It is calculated based on whichever is higher: the declared purchase price or the property’s taxable assessed value. This ensures the tax reflects the true market value of the asset.

IMT rates are progressive, meaning they increase as the property value rises. For most residential properties, rates range from 1% to 8%, while commercial and other non-residential properties are generally taxed at a flat rate of 6.5%. These brackets make IMT one of the most important upfront costs for anyone entering the Portuguese real estate market.

Several factors affect the final IMT amount, including whether the property is urban or rural, located on the mainland or the islands (Madeira or the Azores), and whether it will serve as a primary residence, holiday home, or rental investment. Buyers should review these details carefully, as the rate can vary significantly depending on intended use and location.

Stamp Duty in Portugal

Stamp Duty (Imposto do Selo) is a fixed tax applied to certain transactions in Portugal, including property purchases, mortgages, and financial operations. When buying real estate, Stamp Duty is paid by the buyer in addition to IMT.

For property purchases, the Stamp Duty rate is 0.8% of the property’s value (the higher of the purchase price or the taxable value). If the buyer takes out a mortgage, an additional Stamp Duty applies to the loan amount, usually ranging from 0.5% to 0.6%, depending on the loan term.

Stamp Duty is mandatory for all property transactions in Portugal and is typically paid at the time of the deed signing (escritura). Because it’s a fixed rate, it’s straightforward to calculate and should always be included when budgeting for buying a home or investment property.

Taxes on Property Ownership in Portugal

Annual Municipal Property Tax (IMI)

The Municipal Property Tax (IMI) is a yearly tax applied to all property owners in Portugal. Each municipality sets its own IMI rate, and the amount you pay is based on the property’s taxable value. This value is calculated by the tax authority and considers factors such as location, size, type of property, and overall market conditions.

IMI rates differ across the country, but most urban properties fall between 0.3% and 0.45%, while rural properties are generally taxed at 0.8%. Because the rate is defined locally, your IMI bill will depend on the municipality where your property is located.

Wealth Tax (AIMI)

Portugal doesn’t implement a conventional wealth tax; however, it incorporates a similar concept through the Adicional Imposto Municipal Sobre Imóveis (AIMI). 

It is an annual property tax in Portugal that is levi on the combined fiscal value of all residential properties own by a taxpayer as of January 1st of each year worth above €600.000.

There are three levels of AIMI Tax in Portugal:

  • 7,0% on properties valued between €600,000 and €1M
  • 1,0% on properties valued between €1M and €2M
  • 1,5% if the total properties value is over €2 million

Taxes on Rental Income

Taxes on rental income in Portugal apply to anyone who earns income from leasing a property, whether the owner is a resident or a non-resident. The tax treatment depends on your residency status and the type of rental activity.

For non-residents, rental income from Portuguese property is taxed at a flat rate of 28% on the net amount, after allowable expenses. This rate applies to both long-term and short-term rentals.

For Portuguese tax residents, rental income is added to overall taxable income, which is taxed at progressive IRS rates ranging from 13% to 48%. Residents can deduct a wide range of costs — including maintenance, condominium fees, IMI, insurance, and property management expenses — before the income is taxed.

Capital Gains Tax in Portugal

Capital Gains Tax (CGT) on real estate in Portugal applies to the profits made from selling property. The taxation process and rates vary based on whether you are a tax resident or a non-resident of Portugal.

For Tax Residents: When you sell a property, 50% of the capital gain is subject to taxation. This taxable amount is added to your overall income and taxed according to the progressive income tax rates, which range from 13% to 48%.

For Non-Residents: Non-residents are taxed at a flat rate of 28% on the entire capital gain from the sale of real estate in Portugal.

Exceptions to Capital Gains Tax in Portugal

Portugal offers several helpful Capital Gains Tax (CGT) exemptions that can ease the tax burden for property owners. Tax residents in Portugal selling their primary residence may be exempt from CGT if they reinvest the proceeds in another main home in Portugal or within the EU/EEA within 36 months. 

Residents aged 65 or older can also avoid CGT when the proceeds are reinvested in an approved pension fund or insurance product within six months. Properties bought before January 1, 1989, are fully exempt from CGT under older legislation.

There are also exemptions for property transfers within families. Inheritance and donations to close relatives—such as spouses, children, and parents—are not subject to CGT, although Stamp Duty may apply in some cases.

How to Calculate Capital Gains Tax in Portugal

Let’s say you purchase a property for €200,000, invest €10,000 in improvements, and spend another €10,000 on marketing and sales costs. In the end, you sell the property for €300,000. This gives you a taxable capital gain of €70,000

Capital Gains Tax

  • For Tax Residents: 50% of €70,000 = €35,000, which is then taxed according to progressive income tax rates.
  • For Non-Residents: €70,000 is taxed at a flat rate of 28%.

Inheritance Tax

Inheritance Tax in Portugal is handled through the country’s Stamp Duty system (Imposto do Selo). Portugal does not have a traditional inheritance tax, and this often surprises foreign buyers and expats.

When assets are passed on through inheritance, Stamp Duty applies at a flat rate of 10%. However, there is an important exemption:
Immediate family members — spouses, children, parents, and grandparents — pay no Stamp Duty on inheritance.

This means that most family transfers of property or money are completely tax-free. The tax only applies when the beneficiary is not a direct family member (for example, siblings, cousins, or unrelated individuals).

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Frequently Asked Questions

The IMI (Imposto Municipal sobre Imóveis) is an annual tax on the value of property in Portugal. Rates range from 0.3% to 0.45% for urban properties and up to 0.8% for rural properties. Each municipality sets its rates within these ranges.

IMI is calculated based on the “taxable value” of the property, determined by the tax authorities. This value might differ from the market value. The rate applied depends on the municipality where the property is located.

IMI payments are typically due in one, two, or three installments, depending on the total amount. Payment deadlines are in April, July, and November.

The IMT (Imposto Municipal sobre as Transmissões Onerosas de Imóveis) is a one-time tax paid when you purchase property. Rates depend on the property’s type and value, with different scales for urban and rural properties, and primary versus secondary residences.

IMT must be paid before the property transfer is registered. Typically, this occurs during the signing of the purchase deed.

The IMT is calculated based on the purchase price or the property’s taxable value, whichever is higher. Progressive rates apply, which means the final amount can vary significantly depending on specific conditions like the property’s value and use.

Stamp duty is applied to various legal documents, contracts, and transactions, including property purchases and mortgages. The rate for property transactions is 0.8% of the purchase price or taxable value.

Yes, if you take out a mortgage, an additional stamp duty applies. For loans with a repayment period over five years, the rate is 0.6%. For shorter-term loans, the rate is 0.5%.

Capital gains tax is applied on the profit made from selling a property. For tax residents, 50% of the gain is taxed at progressive rates (14.5% to 48%). Non-residents are taxed at a flat rate of 28% on the entire gain.

Yes, there are exemptions. For example, reinvesting the proceeds from selling a primary residence into another primary residence in Portugal within 36 months can exempt you from CGT. Also, properties purchased before 1989 are exempt.

Yes, property owners can deduct certain expenses from their rental income. These include maintenance costs, IMI, insurance premiums, and other related expenses.

Yes, non-residents must pay property taxes in Portugal, including IMI and IMT. Non-residents are also subject to a flat rate of 28% on rental income and capital gains from property sales.

Consulting a tax advisor or legal professional can help ensure you are paying the correct amount of property tax. They can assist with understanding applicable rates, deductions, and exemptions.

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