Portugal’s property transfer tax – known as IMT (Imposto Municipal sobre as Transmissões Onerosas de Imóveis) – is the biggest single tax you’ll pay when buying a home in the country. It’s paid once, at the point of purchase, and the amount depends on the property’s value, its intended use and, from 2026, whether you’re a Portuguese tax resident.
That last point is new and significant. Portugal’s Parliament approved the Construir Portugal housing package in February 2026, introducing a flat 7.5% IMT rate for non-resident buyers of residential property [1]. For many British buyers purchasing a holiday home or investment property, this roughly doubles the IMT bill compared with the old progressive scale.
Understanding exactly how IMT works – and how to legitimately reduce it – could save you thousands of euros at the point of purchase.
Key takeaway: IMT is a one-off transfer tax paid before you sign the final deed (escritura). From 2026, non-residents pay a flat 7.5% on residential property. Residents still benefit from progressive rates starting at 0%. Exemptions exist if you become a tax resident within two years or commit the property to long-term rental. Always budget for IMT plus 0.8% stamp duty on top.
Contents
- How IMT is calculated
- IMT rates for residents buying a primary home
- IMT rates for second homes and investment properties
- The new 7.5% flat rate for non-residents
- How to avoid the flat rate legitimately
- IMT on rural, commercial and luxury property
- Stamp duty – the other tax at purchase
- IMT tax exemptions and reductions in Portugal
- When and how you pay IMT tax in Portugal
- Worked examples – what you’ll actually pay
- What should I do next?
- Summary
- Frequently asked questions
How IMT is calculated
IMT is calculated on whichever is higher: the declared purchase price or the property’s tax-registered value (the Valor Patrimonial Tributário, or VPT). In practice, for most purchases this is the sale price, because VPTs tend to be well below market value – often three to four times less.
The rate you pay depends on three factors: the property’s value, whether it’s your primary residence or a second home, and whether you’re a tax resident in Portugal. You must pay IMT before signing the final deed at the notary.
IMT rates for residents buying a primary home
If you’re a Portuguese tax resident and the property is your permanent home (habitação própria e permanente), you benefit from the most favourable IMT rates. The 2025/2026 progressive scale works like this:
| Property 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% (flat on full value) | N/A |
| Above €1,128,287 | 7.5% (flat on full value) | N/A |
This means a resident buying a €300,000 (£250,000) home as their primary residence would pay approximately €10,747 in IMT – an effective rate of about 3.6%.
The deduction column is what makes the progressive system work in your favour. You multiply the full property price by the rate for your band, then subtract the deduction to arrive at the final figure.
IMT rates for second homes and investment properties
If you’re a Portuguese tax resident but the property is a second home, holiday home or rental investment, a different scale applies. There’s no initial exemption – tax starts from the first euro:
| Property 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% (flat on full value) | N/A |
| Above €1,128,287 | 7.5% (flat on full value) | N/A |
A resident buying a €300,000 second home would pay roughly €11,790 – about €1,000 more than for a primary residence.
The new 7.5% flat rate for non-residents
This is the change that matters most for British buyers who aren’t planning to become Portuguese tax residents.
Under the Construir Portugal package, approved by Parliament in February 2026, all non-resident buyers of residential property now pay a flat 7.5% IMT – regardless of the property’s value. The progressive scales above no longer apply to you.
The numbers speak for themselves:
| Purchase price | IMT under old progressive scale (second home) | IMT at flat 7.5% | Difference |
|---|---|---|---|
| €200,000 (£167,000) | ~€4,820 | €15,000 | +€10,180 |
| €300,000 (£250,000) | ~€11,790 | €22,500 | +€10,710 |
| €400,000 (£334,000) | ~€18,990 | €30,000 | +€11,010 |
| €500,000 (£417,000) | ~€26,190 | €37,500 | +€11,310 |
At €200,000 the impact is most striking – IMT roughly triples. At higher values the gap narrows as a percentage, because the old progressive rates already approached 7.5% for expensive properties. But in absolute terms, non-residents can expect to pay €10,000–€12,000 more in IMT than a resident would on the same property.
This shifts total buying costs for non-residents from the traditional 7–9% of the purchase price to approximately 9–11%.
How to avoid the flat rate legitimately
The legislation includes three specific exemptions. If you qualify for any of them, you pay the standard progressive rates instead – or you can claim a refund of the difference after the fact.
Become a Portuguese tax resident within two years. If you register as a tax resident within 24 months of completing the purchase, you can apply to the Portuguese tax authority (Autoridade Tributária) for a refund of the difference between the 7.5% you paid and the amount you would have owed under the progressive scale. This is the most relevant route for British retirees planning a permanent move.
Commit the property to long-term rental at moderate rents. If you place the property on the residential rental market within six months of purchase, at a monthly rent of no more than €2,300 (£1,920), and keep it rented for at least 36 months (consecutive or intermittent) within the first five years, the standard progressive IMT rates apply. This route suits investors planning a buy-to-let.
Looking at a move to Portugal?
Browse property listings on our portal or speak to an expert who knows the country.
Public duties exemption. Individuals carrying out official public duties on behalf of Portugal are also exempt – this is unlikely to apply to most British buyers.
In every case, you pay the 7.5% upfront and claim the refund afterwards once conditions are met. It’s worth discussing the timing and paperwork with your Portuguese lawyer before completion.
IMT on rural, commercial and luxury property
Not all property falls under the residential scales. Flat rates apply to certain categories regardless of your residency status:
| Property type | IMT rate |
|---|---|
| Rural land (prédios rústicos) | 5% |
| Commercial property, offices, shops | 6.5% |
| Building plots | 6.5% |
| Residential over €1,128,287 | 7.5% |
| Property bought via offshore entities (black listed jurisdictions) | 10% |
If you’re buying rural land in the Alentejo or a commercial unit, these rates apply whether you’re resident or not.
Stamp duty – the other tax at purchase
On top of IMT, you’ll pay stamp duty (Imposto do Selo) at a flat rate of 0.8% on whichever is higher: the purchase price or the VPT. This applies to all property transactions without exception.
For a €300,000 (£250,000) purchase, stamp duty adds €2,400. If you’re taking out a Portuguese mortgage, an additional stamp duty of 0.5–0.6% applies to the loan amount (0.6% for loans over five years, 0.5% for shorter terms).
Always budget IMT plus stamp duty together – they’re both paid before the escritura.
IMT tax exemptions and reductions in Portugal
Several exemptions can reduce or eliminate your IMT bill entirely:
Urban rehabilitation areas (ARUs). Properties in designated urban rehabilitation areas, or buildings over 30 years old undergoing renovation, may qualify for a full IMT exemption on the first sale after rehabilitation. You’ll also benefit from 6% VAT on construction works (instead of 23%) and an IMI exemption for several years. Many cities across Portugal have ARU designations – it’s worth checking with the local câmara.
Under-35 first-time buyers. Portuguese residents aged under 35 buying their first permanent home benefit from full IMT and stamp duty exemption on properties up to €324,058, and reduced rates up to €648,022.
Primary residence below the exemption threshold. If you’re a resident and the property will be your permanent home, purchases below €104,261 are exempt from IMT entirely.
Properties of national interest. Buildings classified as national heritage are also exempt.
When and how you pay IMT tax in Portugal
IMT must be paid before you sign the final deed (escritura) at the notary. You can pay online through the Portuguese tax portal (Portal das Finanças), at a tax office, or via ATM. Many notaries can also process the payment.
Your lawyer will typically handle the paperwork and ensure the IMT is settled ahead of completion day. The payment generates a receipt (guia de pagamento) that the notary will need before proceeding.
In our experience, it’s worth ensuring your IMT payment is processed at least two to three working days before the planned escritura date to avoid last-minute delays.
Worked examples – what you’ll actually pay
Here’s what total purchase taxes look like for a typical British buyer purchasing a €350,000 (£292,000) property under three different scenarios:
| Resident – primary home | Resident – second home | Non-resident | |
|---|---|---|---|
| IMT | €14,247 | €15,540 | €26,250 |
| Stamp duty (0.8%) | €2,800 | €2,800 | €2,800 |
| Total tax at purchase | €17,047 | €18,340 | €29,050 |
| Effective tax rate | 4.9% | 5.2% | 8.3% |
The gap between the resident and non-resident columns is clear. For a British buyer planning to live in Portugal, registering as a tax resident before or shortly after purchase makes a material difference.
If you’re buying a holiday home with no plan to become resident, budgeting roughly 8–9% of the purchase price for IMT and stamp duty alone is now realistic. Add notary fees, registration, legal costs and any mortgage arrangement fees, and your total buying costs sit at 10–12%.
For a full breakdown of all buying costs, read our guide to Portugal property buying costs.
What should I do next?
The IMT change is significant, but it doesn’t change the fundamentals of buying in Portugal – it changes the maths. If you’re serious about buying, the next steps are practical.
Get tailored tax advice. The exemptions are real, but the conditions are specific. A Portuguese tax adviser or property lawyer can model the numbers for your situation and help you decide whether the residency route or the rental route makes more financial sense.
Talk to a currency specialist. A property costing €350,000 means transferring roughly £292,000 – and exchange rate movements of even 1–2% can add or erase thousands of pounds. Many buyers we help use a currency specialist to lock in a rate ahead of completion. Speak to Smart Currency Exchange about your transfer.
Join our next Portugal property webinar. Our regular Portugal webinars cover costs, process and common mistakes – and you can ask questions directly to experts who work with British buyers every day.
Browse property for sale in Portugal to start your search.
Summary
IMT is the single biggest tax when buying property in Portugal, and the rules changed substantially in 2026. Non-residents now face a flat 7.5% rate on all residential purchases – roughly double what many buyers would have paid under the old progressive scale. For a €300,000 property, that’s about €22,500 in IMT alone, compared with approximately €11,790 for a resident buying a second home.
Three exemptions exist: becoming a tax resident within two years, committing the property to long-term rental at moderate rents, or serving in a Portuguese public role. In each case, you pay the 7.5% upfront and claim a refund once conditions are met.
Residents still benefit from progressive rates, with primary homes under €104,261 exempt entirely. Stamp duty of 0.8% applies to all transactions on top. Budget 8–9% of the purchase price for taxes alone if you’re buying as a non-resident, or 5–6% if you’re buying as a resident.
Planning matters more than ever. Getting the residency timing right, or structuring a rental commitment correctly, can save you over €10,000 on a mid-range purchase.
Frequently asked questions
IMT (Imposto Municipal sobre as Transmissões Onerosas de Imóveis) is Portugal’s one-off property transfer tax, paid by the buyer before signing the final deed. It’s calculated on the higher of the declared purchase price or the property’s tax-registered value. Rates vary depending on property type, intended use and the buyer’s residency status – ranging from 0% for low-value primary homes to a flat 7.5% for non-residents.
From 2026, non-residents pay a flat 7.5% IMT on residential property regardless of its value. On a €400,000 (£334,000) home, that’s €30,000 in IMT before you add stamp duty and other fees. You can claim a refund to the progressive rate if you become a Portuguese tax resident within two years or place the property on the long-term rental market.
Yes, through three routes. First, become a Portuguese tax resident within two years of purchase. Second, rent the property at a moderate rent (up to €2,300 per month) within six months, keeping it rented for at least 36 months in the first five years. Third, you may be exempt if performing official public duties for Portugal. In all cases, you pay 7.5% at completion and apply for a refund of the difference afterwards.
IMT must be paid before the escritura (final deed signing) at the notary. Your lawyer will typically arrange payment through the Portuguese tax portal or at a local tax office. Budget at least two to three working days before your planned completion date to allow for processing.
Yes. Stamp duty (Imposto do Selo) is an additional 0.8% of the purchase price or VPT, paid alongside IMT before the deed is signed. If you’re using a Portuguese mortgage, a further 0.5–0.6% stamp duty applies to the loan amount.
Yes. Rural land (prédios rústicos) is subject to a flat 5% IMT rate regardless of your residency status. Commercial properties and building plots are taxed at 6.5%.
Sources
- Construir Portugal housing package – Portuguese Parliament approved February 2026 (Bill 47/XVII/1); IMT flat rate provision for non-residents. Portugal Resident, 20 February 2026 and 26 February 2026
- IMT rate tables 2025 – Autoridade Tributária e Aduaneira (Portuguese Tax and Customs Authority). Progressive rates confirmed via PwC Portugal Tax Guide 2025
- Flat 7.5% non-resident IMT detail and exemption conditions – Idealista Portugal, 9 December 2025
- Construir Portugal legal analysis including exemptions – Global Lawyers Portugal, 16 December 2025
- MdME legal analysis of Bill 47/XVII/1 – MdME Forward Thinking Law
