Expert advice provided by QP Savills
Dreaming of owning a sun-soaked villa in the Algarve or a chic pied-à-terre in Lisbon? You’re not alone. Portugal has become one of Europe’s most sought-after destinations for international property buyers, offering a charming lifestyle, favorable climate, and—yes—a relatively attractive tax landscape. But before popping the bubbly to celebrate your new home, it’s important to understand the ins and outs of property tax in Portugal.
Here’s a simplified guide to help you navigate the main taxes and fees associated with buying and owning property in Portugal—no legalese, just the essentials.
1. IMT – The Property Transfer Tax
Think of IMT (Imposto Municipal sobre Transmissões) as your ticket to ownership. It’s a one-time property transfer tax paid before you sign the final deed. The amount is based on either the purchase price or the property’s assigned tax value (VPT), whichever is higher.
Rates vary, but here’s a rough idea:
- 6% for properties valued between €621,501 and €1.12M
- 7.5% for properties above €1.12M
- 6.5% for land or commercial buildings
- 5% for rural property
- 10% if the buyer is an offshore entity in a “blacklisted” jurisdiction (like Gibraltar or Barbados)
Good to know: If you’re buying through a corporate structure with a share deal, you might avoid IMT altogether.
The Valor Patrimonial Tributário (VPT), translated to Taxable Property Value, represents the tax value of a property, assigned by the Treasury and distinct from the purchase value. It is used to calculate some taxes such as IPTU or IMT.14 Nov 2024
2. Stamp Duty, Notary, and Legal Fees
Another upfront cost is stamp duty, calculated at 0.8% of the purchase price (or VPT). It’s payable before finalizing the sale.
You’ll also want to budget for:
- Land Registry Fees: About €250
- Notary Fees: Governed by law, based on property price
- Legal Fees: Usually 1–2% of the property’s value, depending on complexity
Tip: A local lawyer is not just helpful—they’re essential. They’ll manage documents, fees, and keep your purchase on track.
3. IMI – The Annual Property Tax in Portugal
Once you’re a homeowner, you’ll pay IMI (Imposto Municipal sobre Imóveis)—an annual property tax based on the VPT. The rate varies depending on location:
- 0.3%–0.45% for urban properties (Loulé, for example, uses the lowest rate)
- 0.8% for rural properties
- 0.4% for corporate-owned properties
- 7.5% for blacklisted offshore entities
IMI is typically paid in two or three instalments each year, depending on the total due.
4. AIMI – The Additional Municipal Property Tax
For high-value real estate, there’s an extra layer: AIMI (Adicional ao IMI). This applies if the total value of your urban properties exceeds certain thresholds.
For individuals:
- 0.7% on €600,000–1M
- 1.0% on €1M–2M
- 1.5% over €2M
Couples enjoy a doubled exemption threshold at €1.2M.
Corporate owners pay 0.4%, unless the property is for personal use, in which case the individual rates apply.
5. Capital Gains Tax (CGT)
Thinking long-term? If you sell your Portuguese property, you’ll want to be aware of CGT.
- Non-residents: Pay a flat 28% on profits
- Residents: Only 50% of the gain is taxable
- Foreign companies: Taxed at 25%
You can reduce your CGT bill if you reinvest proceeds into another EU/EEA primary residence within 36 months.
6. Inheritance Tax (or Lack Thereof)
Here’s a breath of fresh air: Portugal doesn’t charge inheritance tax for spouses, children, or parents. However, there’s a modest 0.8% stamp duty based on the VPT. For non-family members, that rate rises to 10%.
Final Thoughts
Buying a home abroad is a big move, and Portugal makes the journey exciting—and surprisingly manageable. Understanding property tax in Portugal gives you clarity, confidence, and a roadmap to budgeting smartly.
A few golden rules before you buy:
- Always work with a qualified lawyer
- Get to know your property’s VPT—it affects most taxes
- Budget for more than just the purchase price
- Be cautious with offshore ownership structures
Consult with an Expert
Portugal continues to be a top destination for lifestyle seekers, retirees, and savvy investors alike. With the right support and a solid understanding of the tax framework, your property dreams can be a smooth and sunny reality. Contact us for more questions and begin your property search in Portugal.