Taxes When Buying Property in Portugal: Complete Guide 2025
Are you dreaming of buying a house in Portugal? This detailed guide from Maperz.com explains all the taxes you’ll need to pay.
Congratulations! You’ve found your dream home in Portugal. After visiting numerous properties and receiving bank approval for your mortgage, it’s time to take care of the administrative procedures: gathering all the necessary documentation, signing the purchase agreement, and most importantly, paying the taxes associated with buying your property.
In Portugal, there are three mandatory taxes when you buy a property: the Municipal Property Tax (IMI), the Municipal Property Transfer Tax (IMT), and the Stamp Duty (IS). Each has its own characteristics and calculation methods that you need to know in detail.
IMPORTANT: Paying attention to these taxes is crucial as Portugal is known for its strict fines. Any omission or error in paying these taxes can expose you to significant penalties.
1. Municipal Property Tax (IMI)
The IMI (Imposto Municipal sobre Imóveis) is a tax applied to the fiscal value of the property and must be paid annually from the moment you acquire the house. It is equivalent to property tax in other countries and serves to finance Portuguese municipalities and maintain public infrastructures.
How to calculate IMI?
The formula is simple:
IMI = Fiscal value of the property (VPT) × Applicable rate
The rate is defined by each municipality in Portugal but must consider the IMI calculation according to the table with intervals available in the Municipal Property Tax Code (CIMI). For urban properties (houses and land for housing), the IMI varies between 0.3% and 0.5%.
When is IMI paid?
All property owners in Portugal must pay this tax in April. Payment in installments is allowed to facilitate the payment of higher amounts:
- If the IMI does not exceed €250: full payment before the end of April
- If the value is between €250 and €500: possibility to pay in two installments
- If the amount exceeds €500: possibility to pay in three monthly installments
IMI Exemptions
There are two situations in which you can be exempt from paying this tax:
Temporary exemption (3 years)
- The property must be your primary residence
- The value must not exceed €125,000
- The household’s taxable income must be less than €153,300
Permanent exemption
- The household’s annual taxable income must not exceed €15,295 (2.3 times the annual value of the reference social support index of €475 monthly)
TIP: To obtain any of these exemptions, you must request it from Finanças before buying the house and when the property evaluation is completed. Applications made after the purchase are not eligible for exemption.
2. Stamp Duty (Imposto do Selo)
The Stamp Duty (IS) is applied in two different situations when you buy a property in Portugal:
Tax on the purchase and sale of the property
This tax must be paid to the notary at the time of signing the deed of sale. Its calculation is:
IS = Deed value or Fiscal value (the highest) × 0.8%
Tax on mortgages
If you obtain a mortgage loan, you must also pay the stamp duty on the financed amount when it is transferred to your bank account:
- For mortgages with a duration longer than 5 years: 0.6%
- For mortgages with a duration shorter than 5 years: 0.5%
IS = Mortgage loan value × 0.6% (if the repayment period is greater than 5 years)
3. Municipal Property Transfer Tax (IMT)
The IMT (Imposto Municipal sobre as Transmissões Onerosas de Imóveis) is charged each time a house purchase is made in Portugal. It is applied to the fiscal value of the property or the value declared in the deed of sale, taking the higher of the two.
How to calculate IMT?
IMT = Deed value or net fiscal value (the highest) × Applicable rate – tax deduction
This tax must be paid before the purchase of the house, and its calculation considers three specific characteristics:
- Type of property: rural or urban
- Location of the house: mainland Portugal or autonomous regions
- Purpose of purchase: Primary or secondary residence
IMT Exemption
It is possible to benefit from a tax exemption concerning the IMT in Portugal if:
- The house is intended only for clean and permanent housing
- Its value does not exceed €92,407 if the property is in mainland Portugal
- Its value does not exceed €115,509 for the autonomous regions
4. Taxes and Special Considerations for Foreigners
If you are a foreigner considering buying property in Portugal, there are some additional tax considerations to keep in mind:
Tax Identification Number (NIF)
All foreigners wishing to buy property in Portugal must obtain a Portuguese Tax Identification Number (NIF). This procedure costs approximately €10-20 and can be done at any Finanças office.
Additional IMI Tax (AIMI)
Foreigners who own properties in Portugal with a combined fiscal value exceeding €600,000 are subject to the Additional IMI Tax (AIMI), which is applied as follows:
- 0.7% for properties valued between €600,000 and €1,000,000
- 1% for properties valued between €1,000,000 and €2,000,000
- 1.5% for properties valued over €2,000,000
IMPORTANT: Married couples or those in a civil partnership can opt for joint taxation, raising the exemption threshold to €1,200,000.
Tax Regime for Non-Habitual Residents (RNH)
Portugal offers an attractive tax regime for new residents, known as the Non-Habitual Residents Regime (RNH). This program offers significant tax advantages to foreigners who establish their tax residence in Portugal:
- Fixed income tax of 20% on income from Portuguese sources for “high value-added” activities
- Possible tax exemption on income from foreign sources for 10 years
Brexit Impact for British Citizens
Since Brexit, British citizens no longer enjoy the same rights as EU citizens regarding property purchases in Portugal. They now need:
- To obtain an appropriate residence permit or visa
- May face additional requirements to obtain mortgages with Portuguese banks
- Must comply with stricter regulations regarding permanence in the country
Golden Visa through Real Estate Investment
Non-EU foreigners can obtain a residence permit in Portugal (Golden Visa) by investing in properties:
- Minimum investment of €500,000 in properties (or €350,000 in properties for rehabilitation in designated areas)
- Allows free travel throughout the Schengen Area
- Minimum stay requirement of only 7 days per year in Portugal
- Possibility to apply for Portuguese citizenship after 5 years
UPDATE: Since January 2022, residential properties in Lisbon, Porto, and most of the Algarve no longer qualify for the Golden Visa program.
Practical Examples: Tax Calculation
To better understand how these taxes work in practice, let’s analyze two examples of home purchases in different areas of Portugal.
Example 1: Apartment in Príncipe Real (Lisbon)
Let’s imagine you’ve found a nice apartment in the central and exclusive neighborhood of Príncipe Real in Lisbon with the following characteristics:
- Purchase price: €200,000
- Fiscal value (VPT): €190,000 (usually lower than the market price)
- Use: Primary residence
- Financing: Mortgage of €160,000 for 30 years
IMT calculation: Value to consider: €200,000 (the higher between price and VPT) Applicable rate for primary housing in Lisbon: 6% Tax deduction: €5,640.23 IMT = €200,000 × 6% – €5,640.23 = €6,359.77
Stamp Duty (IS) calculation:
- On the purchase and sale: €200,000 × 0.8% = €1,600
- On the mortgage: €160,000 × 0.6% = €960
- Total IS: €2,560
Annual IMI calculation: IMI = €190,000 × 0.3% = €570 annually
Total initial taxes: €6,359.77 (IMT) + €2,560 (IS) = €8,919.77
Example 2: Apartment in Vila Nova de Gaia (Porto)
Now let’s consider an apartment in Vila Nova de Gaia, an up-and-coming area near Porto with excellent views of the Douro River:
- Purchase price: €200,000
- Fiscal value (VPT): €180,000
- Use: Primary residence
- Financing: Mortgage of €140,000 for 25 years
IMT calculation: Value to consider: €200,000 Applicable rate for primary housing: 6% Tax deduction: €5,640.23 IMT = €200,000 × 6% – €5,640.23 = €6,359.77
Stamp Duty (IS) calculation:
- On the purchase and sale: €200,000 × 0.8% = €1,600
- On the mortgage: €140,000 × 0.6% = €840
- Total IS: €2,440
Annual IMI calculation: IMI = €180,000 × 0.35% = €630 annually (Note: Vila Nova de Gaia generally applies an IMI rate of 0.35%, slightly lower than Lisbon)
Total initial taxes: €6,359.77 (IMT) + €2,440 (IS) = €8,799.77
TIP: As you can see, although both properties have the same purchase price, the annual IMI is lower in Vila Nova de Gaia than in Lisbon, which can represent significant savings in the long term for a primary residence.
Conclusions
Now that you know all the taxes related to buying real estate in Portugal and have seen practical examples, you have all the tools to accurately calculate the real cost of your ideal home. This will allow you to make an informed decision and, above all, not be surprised by unforeseen costs.
Frequently Asked Questions
Can I pay the IMI in installments? Yes, depending on the total amount. If it is more than €250, you can divide it into several installments.
When should I apply for the IMI exemption? Always before buying the property and after the property evaluation is completed.
What is the difference between IMI and IMT? IMI is an annual property tax, while IMT is a one-time tax that is paid when making the purchase.
What happens if I don’t pay these taxes? You could face significant fines, as Portugal is strict in enforcing tax obligations.
