Portugal's New 7.5% Property Transfer Tax for Non-Residents: What Buyers Need to Know

Buying property in Portugal while living abroad? Your tax bill could now be higher than expected.

Portugal has introduced a new 7.5% Property Transfer Tax (IMT) rate for non-residents purchasing residential property. The change affects international buyers, including those purchasing a holiday home, investment property or a home before relocating to Portugal.

However, the new rate does not necessarily apply to everyone living outside Portugal. There are important exceptions, particularly for buyers planning to become Portuguese tax residents or rent out their property under certain conditions.

Here is what has changed and what buyers should consider before purchasing property in Portugal.

What Is IMT in Portugal?

IMT, or Imposto Municipal sobre as Transmissões Onerosas de Imóveis, is the Portuguese Property Transfer Tax paid when purchasing real estate.

It is generally calculated on the higher of the property's purchase price or its taxable property value (Valor Patrimonial Tributário, or VPT).

Previously, residential property purchases were generally subject to progressive IMT rates, depending on factors such as the purchase value and whether the property was intended as the buyer's primary residence or a second home. Because non-residents cannot claim a property as their permanent home, they were in practice taxed under the second-home scale.

Under the new legislation, a different approach applies to certain non-resident buyers.

What Has Changed for Non-Resident Property Buyers?

Under Decree-Law No. 97/2026, published on 20 May 2026, Portugal introduced a flat 7.5% IMT rate for non-residents purchasing urban residential properties.

Unlike the standard progressive IMT system, the 7.5% rate applies to the entire taxable value from the first euro, without any exemption or reduction. Buyers domiciled in a blacklisted jurisdiction remain subject to the 10% rate.

The measure applies to acquisitions of urban properties or autonomous units intended exclusively for housing, such as apartments and houses. Commercial premises, building land and rural properties are not covered.

The buyer's tax residency status is particularly important when determining which rules apply. 

How Much More Could Non-Residents Pay?

The financial difference can be significant, particularly for buyers purchasing properties at lower and middle price points.

For example, assuming a non-resident buyer purchases a residential property and does not qualify for any of the exceptions:

These examples assume that the purchase price is also the relevant taxable value. For comparison, under the 2026 second-home scale that applied before the change, the IMT on the same properties would have been approximately €4,606, €11,606, €19,300, €27,300 and €45,000, respectively: an increase of roughly €10,000 to €11,000 in each case. For purchases above €1,150,853, where the standard scale already applied a flat 7.5% rate, nothing changes.

The figures relate only to IMT. Buyers should also account for other acquisition costs, including Stamp Duty (0.8% of the purchase price or VPT, whichever is higher), notary and registration expenses, and any applicable legal or financing costs.

For international buyers, this makes it even more important to calculate the total acquisition cost before signing a binding purchase agreement.

Who Is Affected by the New IMT Rate?

The new rate primarily affects individuals who are not Portuguese tax residents when they purchase residential property.

This may include foreign buyers purchasing a second home, international investors acquiring residential property, and individuals who are still living abroad but intend to move to Portugal.

Importantly, the rule is based on tax residency, not nationality.

A foreign national who qualifies as a Portuguese tax resident may be subject to the standard IMT rules. Equally, a Portuguese citizen living abroad may fall within the new regime.

The legislation also provides exceptions for certain buyers who previously qualified as Portuguese tax residents.

Are There Exceptions to the 7.5% IMT Rate?

Yes. The legislation establishes three important exceptions that may allow buyers to benefit from the standard IMT rules instead of the flat 7.5% rate.

1. Buyers Who Have Previously Been Portuguese Tax Residents

The new rate does not apply where the buyer has previously been considered a Portuguese tax resident under Article 16 of the Portuguese Personal Income Tax Code.

This exception can be particularly relevant for Portuguese nationals living abroad or international buyers who previously lived in Portugal.

The buyer's tax history should be reviewed to confirm eligibility. In this case the standard rates apply directly at the time of purchase, so no refund request is needed, but the buyer should be ready to show evidence of the earlier tax residence.

2. Buyers Who Become Portuguese Tax Residents Within Two Years

People purchasing property before relocating to Portugal may also qualify for an exception.

If a buyer becomes a Portuguese tax resident within two years of purchasing the property, they may ask the Tax Authority to cancel the difference between the 7.5% IMT paid and the IMT due under the standard rates.

This is particularly relevant for individuals planning a move to Portugal who want to purchase a home before establishing tax residency.

However, buyers should not assume that simply applying for a visa or obtaining a residence permit automatically qualifies them for this exception.

Portuguese tax residency is determined under specific tax rules and is not necessarily the same as immigration residency.

3. Properties Intended for Residential Rental

An exception also applies to certain properties purchased for residential rental purposes.

To qualify, the property must meet specific conditions:

• The property must be placed on the residential rental market within six months of acquisition.
• Monthly rent must remain within the applicable legal threshold.
• The property must be let for at least 36 months, consecutive or not, during the first five years after acquisition.

Under the 2026 rules, the relevant monthly rent ceiling is €2,300, based on 2.5 times the national monthly minimum wage of €920, subject to any applicable legal updates.

This exception may be particularly relevant to non-resident landlords planning a long-term residential rental investment rather than keeping a property for occasional personal use. 

Can Buyers Request an IMT Refund?

Yes. Where a buyer becomes a Portuguese tax resident within two years, or meets the qualifying residential rental conditions, the Portuguese Tax Authority may adjust the original tax assessment following a request from the buyer.

The adjustment corresponds to the difference between the IMT originally paid and the amount that would have been payable under the standard rates.

There is an important deadline: the request must be submitted within six months of becoming a Portuguese tax resident or entering into the qualifying rental agreement, depending on which exception applies.

The adjustment is not automatic. Buyers need to request it and demonstrate that the relevant legal conditions have been satisfied. 

Does the New Rate Apply to Commercial Property?

The new 7.5% rule specifically addresses urban properties intended exclusively for residential use.

Commercial properties, land and other categories of real estate may be subject to different IMT rules.

For example, other urban properties are generally subject to a 6.5% IMT rate, while rural properties are generally subject to a 5% rate. Special circumstances can also trigger different treatment.

The property's legal classification and intended use should therefore be reviewed before determining the applicable tax. 

What Should International Buyers Consider Before Purchasing Property?

For buyers living abroad, the new rules make the timing and purpose of a property purchase particularly important.

Someone purchasing a holiday home while remaining tax resident abroad may face a different IMT cost from someone buying a home before relocating to Portugal.

Similarly, an investor purchasing a property for residential rental may qualify for different treatment if the relevant conditions are met.

Before purchasing, buyers should consider their current tax residency, whether they intend to relocate to Portugal within two years, how the property will be used, and whether any exception may apply.

It is also important to distinguish the initial purchase taxes from ongoing property taxes, such as Municipal Property Tax (IMI), which follows a separate set of rules.

Final Thoughts

Portugal's new 7.5% IMT rate represents a significant change for non-residents purchasing residential property.

However, it is not a blanket tax increase for every foreign buyer.

The legislation recognises different situations, including previous Portuguese tax residents, individuals relocating to Portugal and certain residential rental investments.

For international buyers, the key is understanding how their tax residency status and plans for the property affect the transaction before committing to a purchase.

A decision about when to buy, when to establish tax residency or how to use the property can have a direct impact on the final tax cost.

Official Legal Sources

The article is based on the legislation in force as of October 2026:

1. Decree-Law No. 97/2026, of 20 May 2026, which introduced the new rules.

2. Portuguese IMT Code, Article 17, which establishes the applicable tax rates and exceptions.

3. Declaration of Rectification No. 26/2026/1, published on 13 July 2026.