Understanding Property Tax in Portugal in 2025
Important information to know before purchasing real estate in Portugal.
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All you need to know about taxes and fees when buying property in Portugal
Article updated on: 03/13/2025
Investing in real estate in Portugal is an attractive opportunity for many international investors and expatriates, drawn by the country’s sunny climate, rich culture, and economic prospects. However, before making such an investment, it is essential to fully understand Portugal’s tax landscape to avoid surprises and properly plan your investment. This article provides an overview of the main property taxes and fees in Portugal in 2025, helping you prepare for your real estate purchase.
1) Tax Treaties Between Portugal and Other Countries
Portugal has established multiple tax treaties with other countries to prevent double taxation, ensuring that income is not taxed twice. These agreements lay the foundation for administrative cooperation between Portugal and the signatory countries, benefiting residents of one country who have financial interests in the other.
The specific application rules vary depending on the type of income earned. Generally, taxation is determined based on tax residency or the source of the income.
Taxation Rules Based on Income Type
Taxed in the country where the income is generated:
- Real estate income (rental income, etc.)
- Capital gains on real estate
- Business profits, if the company has a permanent establishment in the country for more than 12 months
Taxed in the country of the beneficiary’s residence:
- Investment income (dividends and interest)
- Dividends: Income from shares and other equity securities
- Interest: Income from public debt securities, bonds, and loans
Taxation of pension income:
- Public pensions: Taxed in the paying country (unless the recipient is both a resident and a national of the other country)
- Private pensions: Taxed in the country of residence
Summary of Portugal’s Taxation Rules
- Double taxation is avoided through tax treaties.
- Capital gains and real estate income are taxed in the country where the property is located.
- Capital gains and investment income are taxed in the country of residence (subject to withholding tax).
- Salaries are taxed in the country where the work is performed (with some exceptions).
- Private pensions are taxed in the country of residence.
- Public pensions are taxed in the country that pays them.
- Foreign dividends and royalties may be exempt from taxation, under certain conditions.
If both countries consider a person a tax resident, residency is determined based on permanent home location. If the individual has a home in both countries, personal and economic ties (center of vital interests) are considered. If these do not establish residency, additional criteria are applied.
Understanding these tax agreements can help optimize your financial planning when investing or living in Portugal. If you need expert advice, feel free to contact our specialists!
2) Taxes Related to Buying a Property in Portugal
When purchasing a property in Portugal, several taxes and fees must be paid before finalizing the transaction. The two main taxes are:
1 – IMT (Property Transfer Tax)
IMT is the most significant tax associated with buying real estate in Portugal. It is calculated based on the purchase price or the Taxable Asset Value (Valor Patrimonial Tributário – VPT), whichever is higher.
- Payment: IMT must be paid before signing the final deed and can be settled online, at the notary’s office (depending on the notary), or via ATM.
- Exemptions: If the property is intended as a primary residence, IMT exemption applies in the following cases:
- Properties up to €104,261 on the mainland
- Properties up to €130,326 in the Azores and Madeira
2 – Stamp Duty (Imposto do Selo)
Stamp Duty is charged at a fixed rate of 0.8% on the purchase price or VPT, whichever is higher.
- Payment: This tax must be paid before signing the final deed, following the same process as the IMT payment.
Below is the updated tax table applicable to property purchases in Portugal starting January 1, 2025.
IMT – PRIMARY RESIDENCE PORTUGAL
| VALUE | RATE | DEDUCTION |
|---|---|---|
| Up to 104.261€ | 0% | 0€ |
| 104.261€ – 142.618€ | 2% | 2 085.22€ |
| 142.618€ – 194.458€ | 5% | 6 363,76€ |
| 194.458€ – 324.058€ | 7% | 10 252,92€ |
| 324.058€ – 648.022€ | 8% | 13 493,50€ |
| 648.022€ – 1.128.287€ | 6% | 0€ |
| Above 1.128.287€ | 7,5% | 0€ |
IMT – PRIMARY RESIDENCE PORTUGAL MADEIRA & AZORES
| VALUE | RATE | DEDUCTION |
|---|---|---|
| Up to 130.326€ | 0% | 0€ |
| 130.326€ – 178.273€ | 2% | 2 606,52€ |
| 178.273€ – 243.073€ | 5% | 7 954,71€ |
| 243.073€ – 405.073€ | 7% | 12 816,17€ |
| 405.073€ – 810.028€ | 8% | 16 866,90€ |
| 810.028€ – 1.410.359€ | 6% | 0€ |
| Above 1.410.359€ | 7,5% | 0€ |
IMT FOR YOUNG PEOPLE UP TO 35 YO – PRIMARY RESIDENCE PORTUGAL
| VALUE | RATE | DEDUCTION |
|---|---|---|
| Up to 324.058€ | 0% | 0€ |
| 324.058€ – 648.022€ | 8% | 25 924,64€ |
| 648.022€ – 1.128.287€ | 6% | 0€ |
| Above 1.128.287€ | 7,5% | 0€ |
IMT FOR YOUNG PEOPLE UP TO 35 YO – PRIMARY RESIDENCE MADEIRA & AZORES
| VALUE | RATE | DEDUCTION |
|---|---|---|
| Up to 405.073€ | 0% | 0€ |
| 405.073€ – 810.028€ | 8% | 32 405,80€ |
| 810.028€ – 1.410.359€ | 6% | 0€ |
| Above 1.410.359€ | 7,5% | 0€ |
IMT – SECONDARY RESIDENCE / INVESTMENT PORTUGAL
| VALUE | RATE | DEDUCTION |
|---|---|---|
| Up to 104.261€ | 1% | 0€ |
| 104.261€ – 142.618€ | 2% | 1 042,61€ |
| 142.618€ – 194.458€ | 5% | 5 321,15€ |
| 194.458€ – 324.058€ | 7% | 9 210,31€ |
| 324.058€ – 621 501€ | 8% | 12 450,89€ |
| 621 501€ – 1.128.287€ | 6% | 0€ |
| Above 1.128.287€ | 7,5% | 0€ |
IMT – SECONDARY RESIDENCE / INVESTMENT MADEIRA & AZORES
| VALUE | RATE | DEDUCTION |
|---|---|---|
| Up to 130.326€ | 1% | 0€ |
| Entre 130.326€ – 178.273€ | 2% | 1 303,26€ |
| 178.273€ – 243.073€ | 5% | 6 651,45€ |
| 243.073€ – 405.073€ | 7% | 11 512,91€ |
| 405.073€ – 776.876€ | 8% | 15 563,64€ |
| 776.876 – 1.410.359€ | 6% | 0€ |
| Above 1.410.359€ | 7,5% | 0€ |
Source: Portuguese Tax Authority
- Building plots, commercial properties, office spaces, and standalone parking spaces: Flat IMT rate of 6.5%
- Agricultural land: IMT rate of 5%
3) Property Taxation in Portugal
IMI – Municipal Property Tax (Imposto Municipal sobre Imóveis)
IMI is an annual municipal tax levied on all real estate properties (both buildings and land) located in Portugal. The tax is calculated based on the Taxable Asset Value (Valor Patrimonial Tributário – VPT), which is determined by the Portuguese Tax Authority. The VPT is usually significantly lower than the market value, often three to four times less.
IMI Tax Rates
Each municipality sets its own IMI rates within the following limits:
- Residential properties: 0.3% to 0.45% of the VPT
- Commercial, industrial, and other non-residential properties: 0.4% to 0.8% of the VPT
- Undeveloped (rural) land: 0.6% to 1% of the VPT
IMI Exemptions & Reductions
Certain conditions allow property owners to benefit from temporary exemptions or reductions:
- Temporary exemption for new properties intended as the owner’s primary residence.
- Reduction or exemption for properties classified as cultural heritage or for low-income homeowners.
IMI Payment Schedule
IMI is paid annually, with the number of installments depending on the total amount due:
- Up to €250 → Single payment in April
- Between €250 and €500 → Two installments (April & November)
- Above €500 → Three installments (April, July & November)
| Municipality | IMI Tax Rate |
|---|---|
| Porto | 0,324% |
| Lisbonne | 0,3% |
| Oeiras | 0,3% |
| Cascais | 0,33% |
| Sintra | 0,3% |
| Setúbal | 0,37% |
| Faro | 0,3% |
| Olhão | 0,37% |
| Loulé | 0,3% |
| Tavira | 0,3% |
| Vila Real de Santo António | 0,45% |
| Castro Marim | 0,39% |
AIMI – Additional Property Tax (Tax on Higher-Value Properties)
AIMI (Additional to IMI) is an annual tax applied in addition to the standard IMI in Portugal. It applies only to residential properties and building plots and is based on the total taxable value (VPT) of all real estate owned by each taxpayer.
Who Is Subject to AIMI?
- ✔️ Individuals (Private Owners)
- ✔️ Companies & Legal Entities
- ✔️ Undivided Estates (Inherited Properties Not Yet Distributed Among Heirs)
AIMI Exemptions & Allowances
- Individuals receive a €600,000 exemption on the total VPT of their residential properties.
- Married or de facto couples can opt for joint taxation, doubling the exemption to €1,200,000.
AIMI Tax Rates for Individuals (2025)
| VPT Range (€) | AIMI Tax Rate |
|---|---|
| Up to €600,000 | 0% |
| €600,001 – €1,000,000 | 0,7% |
| €1,000,001 – €2,000,000 | 1% |
| Above €2,000,000 | 1,5% |
AIMI does not apply to properties used for commercial, industrial, or tourism-related activities.
This tax has remained unchanged since its introduction in 2017 and is calculated annually based on property ownership as of January 1st of each year.
AIMI Tax Rates for Jointly Taxed Couples
For married or de facto couples who choose joint taxation, the exempt threshold increases to €1.2 million. Beyond this amount, the following tax rates apply:
| VPT Range (€) | AIMI Tax Rate |
|---|---|
| Up to €1,200,000 | 0% |
| €1,200,001 – €2,000,000 | 0,7% |
| €2,000,001 – €4,000,000 | 1% |
| Above €4,000,000 | 1,5% |
Note: This joint taxation regime results in the same total tax as if each spouse applied their individual €600,000 exemption separately.
AIMI Tax Rates for Companies (Legal Entities)
- Flat rate of 0.4% on the entire VPT of residential real estate owned by the entity.
- No exemption for companies—the tax applies from the first euro of taxable property value.
Exception: If a company owns a property for the private use of its executives or shareholders, the individual AIMI rates apply instead.
AIMI for Properties Held in Offshore Jurisdictions
To discourage offshore tax avoidance, a 7.5% surcharge applies to properties owned by entities registered in blacklisted tax havens.
Recent Developments & 2025 Outlook
- No significant changes to AIMI were introduced in the 2024/2025 budget.
- The government confirmed the continuation of this tax in 2025 as part of extraordinary state contributions.
- Proposed adjustments, such as excluding certain rental properties used for commercial or professional purposes, have not yet been implemented.
AIMI Declaration & Payment
- AIMI is calculated in June, based on property ownership as of January 1st.
- Payment is due in September as a single installment.
Tax Planning Tips
- If you are married and own high-value real estate, consider joint taxation to double the exemption threshold to €1.2 million.
- However, in cases of unequal ownership, separate taxation may be more advantageous (each spouse benefits from an individual €600,000 exemption).
- Run tax simulations to determine the best option and minimize your AIMI liability.
Other Taxes in Portugal
Municipal Sanitation Tax
Some municipalities impose a sanitation network maintenance tax, which varies by local authority. The amount is set by each municipality and typically appears on utility bills.
Inheritance Tax in Portugal
- No inheritance tax between spouses, direct descendants, or ascendants in Portugal.
- However, estate planning is recommended to determine the applicable inheritance law and optimize succession arrangements.
- If heirs reside in France, they may be subject to French inheritance tax on their inheritance, according to French tax laws.
Stamp Duty on Transfers
- Transfers of assets between individuals are subject to Stamp Duty at 10%.
- Exemptions apply to spouses, descendants, and ascendants.
No Wealth Tax in Portugal
Portugal does not impose a Wealth Tax, making it an attractive destination for high-net-worth individuals.
4) Capital Gains Tax on Real Estate in Portugal
The taxation of capital gains (profits made from selling real estate) in Portugal has undergone significant changes, especially for non-residents, in an effort to promote fairer tax treatment.
Here’s an overview of the applicable rules for 2025:
For Portuguese Tax Residents
General Rule:
- 50% of the capital gain is added to your annual taxable income and subject to Portugal’s progressive IRS tax brackets (13% to 48%).
- Example: If you make a €100,000 capital gain, €50,000 will be added to your taxable income and taxed at your marginal tax rate.
- The effective tax rate on real estate capital gains typically ranges from 0% to 24%, depending on your total income.
Exemptions & Reductions:
Primary Residence Exemption
- If you sell your primary residence and reinvest the proceeds in a new primary residence in Portugal or the EU/EEA within 36 months, you may qualify for a full or partial exemption.
- (Note: For sales before September 11, 2024, the reinvestment period is 24 months).
Senior Exemption (65+ years old)
- If you are over 65, you can reinvest the sale proceeds from any property (primary or secondary residence) into an eligible life insurance or pension fund within 6 months to avoid capital gains tax.
For Non-Residents
Aligned with Residents:
- Since January 1, 2023, non-residents are taxed under the same rules as residents:
- 50% of the capital gain is taxable and subject to Portugal’s progressive IRS tax brackets.
- Example: If a non-resident sells a property in 2025 with a €100,000 capital gain, they will only be taxed on €50,000 at progressive tax rates—a significant improvement over the previous 28% flat tax on the entire gain.
Temporary Measures (2023-2024):
- “Mais Habitação” Law: Until the end of 2024, selling a second home or rental property was exempt from capital gains tax if the proceeds were used to pay off a mortgage on the seller’s primary residence.
- This measure expires in 2025 unless renewed.
Tax Optimization Tips
- Plan Reinvestments Carefully: If selling a primary residence, coordinate your sale and reinvestment within the allowed timeframe (ideally within the same tax year) to secure exemptions.
- For Seniors: Consider life insurance or pension annuities as a tax-free reinvestment option.
- For Non-Residents: Take advantage of the new aligned taxation, which eliminates the previous 28% surtax. If selling a high-value property, it may even be worth becoming a tax resident in the year of the sale to optimize taxation.
- Check “Mais Habitação” Benefits: If eligible, act before December 31, 2024, to use sale proceeds for mortgage repayment under the temporary exemption rules. Also, stay informed about potential new incentives in 2025.
Conclusion
Portugal has simplified and harmonized its capital gains tax system, ensuring fair treatment for both residents and non-residents.
5) Rental Income Tax in Portugal
For Non-Residents in Portugal
If you are a non-resident taxpayer (e.g., a French tax resident), you will be taxed in Portugal on your Portuguese-source income, without application of the IRS progressive scale. Only income received in Portugal is concerned, in accordance with the tax treaties between the two countries aimed at avoiding double taxation.
Short-Term Rentals (Alojamento Local) – Non-Residents
If you are a non-resident renting out furnished property for tourist purposes, your rental income is taxed under the local lodging (Alojamento Local – AL) regime:
VAT & Simplified Taxation:
- Subject to VAT (6%) if annual revenue exceeds €10,000.
- Simplified tax regime available for annual revenue up to €200,000.
Taxable Base Calculation for Non-Residents:
- 35% of gross revenue for properties outside containment zones.
- 50% of gross revenue for properties inside containment zones (stricter regulations introduced in 2020).
Effective Tax Rates for Non-Residents:
- Outside Containment Zones: 8.75% of gross income (calculated as 25% of 35% taxable base).
- Inside Containment Zones: 12.5% of gross income (calculated as 25% of 50% taxable base).
Example Calculation:
- Annual Revenue: €10,000
- Taxable Base (Outside Containment Zone): €3,500 (35% of €10,000)
- Tax Due (25% of €3,500): €875
- Final Tax on Short-Term Rental Income: €875
Formalities:
- Must declare the start of rental activity with the tax authorities before beginning operations.
- File an IRS declaration (Model 3 – Annex B) in May of the following year.
Tax Residency Consideration:
Rental income is taxed in the country where the property is located, as per Portugal’s double taxation agreements.
Long-Term Rentals – Non-Residents
- Tax on long-term rental income: flat rate of 25%.
- You must file your rental income tax return with the tax authorities in Portugal.
It is important to note that this information is subject to change in line with changes in legislation.
Key Considerations:
- Long-term rental income must be declared to the Portuguese Tax Authorities.
- Tax rates decrease for longer lease agreements, incentivizing stable rental contracts.
- Tax laws may change, so consulting a professional is recommended for up-to-date guidance.
For Residents in Portugal
In Portugal, rental income (rendimentos prediais) is generally taxed separately (autonomously) from other income, such as salaries or pensions. According to Article 72 of the IRS Code, the applicable tax rates are:
- 25% for residential rental income (long-term housing leases)
- 28% for non-residential rental income (e.g., commercial or rural leases)
However, taxpayers may choose to include rental income in their overall income (called englobamento), which is then taxed at progressive IRS rates ranging from 13% to 48%, depending on the total income and tax bracket.
IRS – Personal Income Tax
Portugal applies a progressive tax system, where each income bracket is taxed at a specific rate rather than the entire income being taxed at a single rate.
IRS Tax Brackets for 2025
| Taxable Income (€) | IRS Tax Rate |
|---|---|
| Up to 8 059€ | 13% |
| 8 059€ – 12 160€ | 16,5% |
| 12 160€ – 17 233€ | 22% |
| 17 233€ – 22 306€ | 25% |
| 22 306€ – 28 400€ | 32% |
| 28 400€ – 41 629€ | 35,5% |
| 41 629€ – 44 987€ | 43,5% |
| 44 987€ – 83 696€ | 45% |
| Above 83 696€ | 48% |
Reduced Tax Rates for Long-Term Residential Leases
Portugal offers tax incentives for long-term residential rental contracts. The standard 25% rate may be reduced as follows:
| Lease Duration | IRS Tax Rate |
| Up to 2 years | 25% |
| 3 to 5 anos | 25% |
| 5 to 10 anos | 15% |
| 10 to 20 anos | 10% |
| Over 20 anos | 5% |
These reductions apply only to residential leases intended for permanent housing.
Exclusions from Tax Benefits
⚠️ No tax reduction applies to residential leases signed from January 1, 2024, if the monthly rent exceeds 50% of the general rental price limits by property type and location as defined in Ordinance No. 176/2019.
6) Exemptions & Special Tax Regimes
RNH – Non-Habitual Resident (NHR) Status
Changes to the NHR Regime in 2024/2025
The Non-Habitual Resident (NHR) tax regime, which offered 10 years of tax exemptions or reduced rates on certain foreign income, was abolished on January 1, 2024 due to housing market pressure and EU concerns.
Transition Period:
- Individuals who became Portuguese tax residents before December 31, 2023, could still apply for NHR until March 31, 2024.
- Those who move to Portugal before December 31, 2024, may still apply for NHR (until March 31, 2025) if they meet specific criteria (job offer, qualifying visa, etc.).
Introduction of NHR 2.0 (From 2024 Onward)
A new, more targeted regime called “NHR 2.0” replaces the previous NHR system. It remains valid for 10 years and is available to new residents who have not been Portuguese tax residents in the past 5 years.
Key Features of NHR 2.0:
- Flat 20% tax rate on income from highly qualified professions in strategic sectors.
- Foreign pensions are no longer eligible for tax benefits.
Impact for Retirees:
- Existing NHR retirees keep their 10% flat tax on foreign pensions for the remainder of their 10-year period.
- New retirees moving to Portugal after the transition period will be taxed under standard progressive tax brackets.
NHR 2.0 for Qualified Professionals:
- The new regime only benefits skilled professionals, offering a reduced 20% tax rate on Portuguese income.
- All other professions will be taxed under the progressive tax system.
- Residency requirement: Beneficiaries must remain Portuguese tax residents for the entire 10-year period and meet eligibility criteria each year.
Golden Visa Program – Current Status
The Portugal Golden Visa program has undergone major changes in 2023 and 2024.
As of October 2023:
- Real estate investment is NO LONGER eligible for a Golden Visa.
- Other investment options (such as venture capital funds, job creation, and research funding) still apply.
New Tax Incentives for Young Homebuyers
Since August 2024, a special tax regime supports first-time homebuyers under 35 purchasing their primary residence:
- Full exemption from IMT (Property Transfer Tax) and Stamp Duty for properties up to €324,058.
- Reduced IMT rate of 8% for properties between €324,058 and €648,022, with a €25,924.64 tax reduction.
Objective: This initiative aims to ease homeownership costs for young buyers by significantly reducing acquisition expenses.
Conclusion
Portugal’s tax incentives have shifted focus from retirees to skilled professionals and young homebuyers. The NHR regime is now more limited, the Golden Visa no longer includes real estate, and new policies aim to boost local homeownership.
Contact Our Real Estate Experts in Portugal
Your Turnkey Real Estate Project in Portugal with Tagus Property
- Personalized consultation to understand your real estate needs
- Financing options review (if required)
- Creation of a detailed project brief tailored to your goals
- Proposal of a customized support mandate
- Single point of contact
- Full market research to find the best properties
- Targeted selection of properties matching your criteria
- Pre-visits & environment analysis (neighborhood, noise, surroundings)
- Detailed pre-visit report
- Scheduling and organizing property viewings
- Price & purchase condition negotiations on your behalf
- Secure transaction process with legal support
- Lawyer assistance for contract review and due diligence
- Notary assistance for signing the final deed
- Help with settling in through our local partners (if needed)
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