Property Taxes in Portugal: Annual Rates and Rules for Expats

Purchasing property in Portugal is often a more affordable investment than buying real estate in countries like the U.S., making it an attractive option for expats. 

However, real estate owners are subject to different tax rates depending on the property’s value and its intended purpose.

To help you understand property taxes in Portugal, this guide will explain:

• Conditions under which the property tax in Portugal applies
• Types and rates of Portuguese property tax
• Tax benefits of buying real estate in Portugal

Does Portugal Have Property Taxes?

Portugal imposes property taxes on both Portuguese tax residents and non-residents who own property within the country. It also requires them to obtain a Portuguese tax number (Numero de Contribuinte or Número de Identificação) to pay taxes.

The tax rates are generally lower for Portuguese non-residents. They are also only liable for tax on property located in Portugal and may qualify for tax reductions or lower, flat tax rates.

On the other hand, tax residents are subject to tax on property based inside and outside Portugal and often pay tax at progressive rates, which means taxes increase based on the property’s value.

How Much Are Property Taxes in Portugal per Year?

As a real estate owner in Portugal, you may be subject to one-time and annual property taxes at varying rates. The tax rates and obligations vary depending on whether:

• You are buying or selling the property
• The property is generating rental income
• The property is being transferred (e.g., through inheritance or donation)

Taxes you must pay as either a Portuguese tax resident or non-resident, based on the above factors, include:

1. Annual property tax (IMI)
2. Additional municipal property tax (AIMI)
3. Taxes when buying property in Portugal (IMT)
4. Stamp duty (IS)
5. Tax on rental income
6. Capital gains tax

Annual Property Tax in Portugal (IMI)

The annual municipal property tax in Portugal, known as Imposto Municipal Sobre Imóveis (IMI), is a tax you must pay on immovable property you own in the country. 

Portugal’s IMI property tax rate is the same for Portuguese residents and non-residents, but varies based on the property’s location as follows:

1. Urban areas: Tax rates range from 0.3% to 0.45%. For instance, the rate in Lisbon is 0.3%, while in Porto it’s 0.324%
2. Rural areas: Properties are taxed at a fixed rate of 0.8%

The exact IMI you are liable for is calculated by multiplying the municipal tax rate and the Valor Patrimonial Tributário (VPT). The VPT is the property’s value, which is determined using factors such as location, size, quality, and year of construction.

Typically, the rate of 0.4%–0.8% applies to property valued before 2004, while properties re-valued after 2004 are taxed at a 0.2%–0.5% IMI rate.

The tax will apply as long as you own the property on December 31 in the year under consideration.

Additional Municipal Property Tax (AIMI)

Adicional ao Imposto Municipal sobre Imóveis (AIMI), commonly known as the wealth tax on Portuguese property, is an annual tax levied on higher-value real estate regardless of residency status. The rules apply as follows:

1. Individuals: Real estate valued at over €600,000 is subject to a 0.7% tax rate, while property worth more than €1.5 million is subject to a 1% tax rate
2. Companies: A flat rate of 0.4% is applied on the total value of real estate owned, with no exemptions or thresholds 

Spouses sharing property ownership are subject to special taxation rules. They are required to pay AIMI on properties exceeding €1.2 million in value.

Taxes When Buying Property in Portugal (IMT)

The Imposto Municipal sobre as Transmissões Onerosas de Imóveis (IMT) is a tax on buying a Portuguese property. It’s also known as the property transfer tax in Portugal, and its amount depends on several crucial factors, including:

• Real estate type and location: The rates are different for rural and urban properties. Rural properties are usually taxed at 5%, whereas luxury homes are taxed at 7.5%
• Purpose of the purchase: Primary residence is taxed at a rate of up to 7.5%, while secondary residence (rented out property) is subject to a tax rate of 1%–8%. Additionally, commercial property is subject to a 6.5% tax rate

The following table illustrates Portugal’s property transfer tax (IMT) rates in 2025, assuming the property is used as the primary residence:

Property Value	Tax Rate
Up to €104,261	0%
€104,261–€142,618	2%
€142,618–€194,458	5%
€194,458–€324,058	7%
€324,058–€648,022	8%
€648,022–€1,128,287	6%
Above €1,128,287	7.5%

Stamp Duty Tax (IS)

Stamp duty tax, or Imposto de Selo (IS), applies to mortgages, loans, deeds, and contracts when buying a property in Portugal. Its rate depends on the type and value of the real estate, but it’s typically 0.8%.

When you obtain a mortgage, in addition to the regular IS rate, you must pay a 0.6% tax if the repayment period exceeds five years, or 0.5% if it’s five years or less.

IS is also levied when gifting or inheriting a property, as Portugal generally doesn’t have inheritance and gift taxes. The tax rate is 0.8% if the property is transferred as a gift to or inherited by your spouse, children, parents, or grandparents. In other cases, the rate is 10%.

The IS rates on inheritance and gifts are added to the regular stamp duty tax. 

Tax on Rental Income

Individuals renting out property in Portugal are required to pay a 10% stamp duty tax on the rental amount. In addition, rental income is taxed differently depending on the residency status:

1. Non-residents pay a flat tax rate of 28% on rental income
2. Residents are taxed at progressive rates, which vary based on the income amount and range from 13.25% to 48%

Note that repair expenses and utility payments are deducted from the tax bill as long as you can provide corresponding receipts.

Capital Gains Tax (CGT)

Income generated from selling a property in Portugal is subject to capital gains tax (CGT). The tax rates differed for residents and non-residents in the past, as non-residents were taxed at a flat 28% rate on the full gain.

As of January 2023, the CGT rules are the same for Portuguese tax residents and non-residents. According to the updated rules, individuals selling a property in Portugal must pay tax at a progressive rate of 13.25%–48% on 50% of the gain.

However, you may be exempt from CGT on selling real estate if one of the following applies:

• You sell your primary residence
• You reinvest the gain in another primary residence
• You are over 65 years old and reinvest the gain in insurance or a pension fund

When Are Property Taxes Due in Portugal?

Deadlines for filing property taxes in Portugal vary based on the type of tax you are due to pay. Depending on the amount of tax you owe, you can pay IMI in up to three installments:

Number of Installments	Eligible Amounts	Due Date
One installment	Under €100	June 30
Two installments	Between €100 and €500	June 30 and September 1
Three installments	Over €500	June 30, September 1, and December 2

Other types of Portuguese property taxes are due on the following dates:

• AIMI: Payable by September 30
• IMT: Due before the buyer signs the final deed of the sale
• Stamp duty: Due before completing the purchase contract
• CGT on a property sale: Declared and paid by June 30 of the following year
• Rental income tax: Filed between April 1 and June 30 and paid by August 31

Tax Benefits of Buying Property in Portugal as an Expat

Some of the primary benefits of purchasing real estate in Portugal as a foreigner include:

1. IMI exemptions 
2. IMT tax reliefs

IMI Exemptions 

You may be exempt from IMI for up to three years if your Portuguese property is used either as a primary residence or placed on the rental market. The exemption applies if the property meets these conditions:

• It is an urban property with a VPT of up to €125,000
• It is owned by an individual, not a company
• It generated an income of up to €153,300 in the year before the purchase

A permanent exemption from IMI is only possible for individuals whose household taxable income is lower than €15,295.

IMT Tax Reliefs

There is no IMT on mainland Portugal properties valued at less than €92,407 and properties in the autonomous region with a value of up to €115,509.

You may also be exempt from IMT if the property is:

• Registered as undergoing rehabilitation
• Purchased for resale by a real estate trading company
• Bought by a real estate investment fund for residential letting

As an individual purchasing real estate, you may qualify for the urban rehabilitation exemption. This allows you to benefit from a reduced value-added tax (VAT) rate of 6% for rehabilitation work. You will also benefit from an IMT exemption, or you can claim an IMT refund if you have already paid tax. 

The eligibility conditions for the urban rehabilitation exemption include the following:

• The property must be over 30 years old or located in a designated Urban Rehabilitation Area (ARU)
• The property must be used as your permanent residence or rented out on a long-term basis
• You must begin rehabilitation works within three years of the property’s purchase date
• The works must comply with legal frameworks under the Regime Jurídico da Reabilitação Urbana (RJRU) or the Regime Excecional de Reabilitação Urbana (RERU)

How To Reduce Property Tax in Portugal as an Expat

Although you may be able to claim property tax exemptions and reliefs in Portugal, you could still be liable for taxes in your home country, depending on its laws. For instance, U.S. citizens are subject to U.S. taxes on worldwide income and capital gains, regardless of their tax residency status abroad. 

Fortunately, as a U.S. expat, you can still reduce the taxation of your Portuguese property by claiming one of these tax exclusions:

Tax Relief Method	Overview
Foreign tax credit (FTC)	In case both countries impose a property tax, the FTC prevents double taxation by providing a dollar-for-dollar credit against your U.S. tax liability. If the Portuguese tax rate is higher than the U.S. rate, the credit covers your full tax obligation in America, but you won’t get a refund for the difference.
Foreign earned income exclusion (FEIE)	The FEIE allows you to exclude up to $126,500 of income earned in Portugal from U.S. taxation. You only qualify for this exemption if you are a bona fide Portuguese resident or spend at least 330 full days outside the U.S. during any 12-month period

Additionally, Portugal and the U.S. have a double taxation agreement, which grants the primary taxing right on specific income to one of the contracting jurisdictions. However, the treaty contains a savings clause that allows the U.S. to tax its citizens regardless of the treaty provisions. This is why the FTC and FEIE are more reliable options for avoiding double taxation.

To fully understand your tax obligations while holding a property in Portugal and potentially reduce your tax liability, consult professional advisors from Nomad Capitalist.

Optimize Your Taxes in Portugal With Nomad Capitalist

Nomad Capitalist is an advisory firm that provides professional guidance to high-net-worth expats looking to streamline their relocation process. We assist you in understanding your tax obligations while relocating, as well as:

• Minimise cross-border tax liability
• Prevent double taxation
• Develop an offshore tax plan that aligns with your finances

All these services are included in our Action Plan, a personalized strategy designed to meet your relocation goals and optimize your tax obligations. In addition to a comprehensive tax plan, we can help you obtain a second citizenship, secure global asset protection, diversify your investment portfolio, and much more.

To get started, complete a quick application form to check whether you’re a good fit. If eligible, we will:

1. Schedule a private onboarding call to understand your relocation goals better
2. Develop and present a step-by-step overview of your Action Plan
3. Implement the plan and handle all the administrative work
4. Provide ongoing support with renewals and admin work

Want to learn how to legally reduce taxes, protect assets, and gain the freedom to live and invest where you’re treated best? Create a custom international strategy today!