Overview of Property Taxes in Portugal
Understanding the Portuguese tax system is crucial for any real estate investment. This guide covers the three main taxes: IMT (purchase), IMI (annual), and capital gains (on sale).
IMT — Property Transfer Tax (Imposto Municipal sobre Transmissões)
IMT is the largest one-time cost when buying property in Portugal. It's paid before the deed is signed.
2026 Rates for Urban Residential Property
| Property Value | Rate |
|---|---|
| Up to €106,346 (primary) | 0% |
| €106,346 – €145,209 | 2% |
| €145,209 – €196,717 | 5% |
| €196,717 – €284,055 | 7% |
| €284,055 – €574,713 | 8% |
| €574,713 – €1,150,853 | Flat 6% |
| Above €1,150,853 | Flat 7.5% |
Example Calculation
Buying an apartment for €500,000 (secondary residence):
- IMT = approximately €30,000 (effective rate ~6%)
IMI — Annual Property Tax (Imposto Municipal sobre Imóveis)
IMI is an annual tax based on the property's official tax value (VPT), not market value.
Rates
| Property Type | Rate |
|---|---|
| Urban | 0.3–0.45% of VPT |
| Rural | 0.8% of VPT |
The VPT is typically 30–50% below market value, making effective IMI rates quite low.
Example
Property purchased for €500,000, VPT of €300,000:
- Annual IMI = €900–1,350
AIMI — Additional Property Tax
For properties owned by individuals with total VPT above €600,000:
- 0.7% on value between €600K–€1M
- 1.0% above €1M
- Corporate-owned properties: 0.4% (or 7.5% if held in tax haven jurisdictions)
Stamp Duty (Imposto de Selo)
- 0.8% of the purchase price or VPT (whichever is higher)
- Paid at the time of purchase alongside IMT
Capital Gains Tax
For Residents
- Only 50% of the gain is taxable
- Added to other income and taxed at progressive rates (14.5% to 48%)
- Reinvestment exemption: if proceeds are reinvested in another primary residence within 36 months, the gain can be fully or partially exempt
For Non-Residents (since 2023)
- Same treatment as residents: only 50% of the gain is taxable at progressive rates
- Previously was a flat 28% on the full gain — the new rule is more favourable for most sellers
- No reinvestment exemption available
Deductible Costs
- Purchase costs (IMT, stamp duty, notary)
- Improvement works (documented, within last 12 years)
- Real estate agent commission
- Energy certificate
Example
Bought for €400,000, sold for €600,000 after 5 years:
- Gain: €200,000
- Less costs (~€35,000): Net gain €165,000
- Taxable (50%): €82,500
- Tax at ~35% effective rate: ~€28,875
Rental Income Tax
For Non-Residents
- Flat rate of 25% on gross rental income (no deductions)
- OR opt to be taxed as a resident: progressive rates but with deductions for expenses
For Residents
- Progressive rates (14.5%–48%)
- Can deduct: maintenance, insurance, IMI, condominium fees, management costs
Long-term Rental Incentives (2026)
- Contracts 5–10 years: 15% reduced rate
- Contracts 10–20 years: 10% reduced rate
- Contracts 20+ years: 5% reduced rate