Understanding property taxes in Portugal matters before you buy. Whether purchasing a holiday home, investment property, or relocating permanently, Portugal's tax system affects your costs at purchase, during ownership, and at sale.

Portugal charges taxes at multiple stages: one-time taxes when you buy, annual taxes while you own, and capital gains when you sell. Amounts vary based on property value, location, and residency status. Property taxes in Portugal for expats work the same as for Portuguese nationals in most cases, though residency status affects rental income and capital gains rates.

This guide covers every property tax you'll face. We'll break down annual ownership taxes, purchase taxes, rental income taxes, and how residency affects what you pay.

What property taxes apply in Portugal?

Portugal's property tax system applies to all owners, whether you're a resident or non-resident. The taxes break down into three main stages: taxes at purchase, annual taxes during ownership, and taxes when you sell or earn rental income.

Understanding property taxes in Portugal matters because they affect your total cost of ownership significantly. Some taxes apply once, like the property purchase tax. Others recur annually, like IMI. The amounts vary based on property value, location, and how you use the property.

Annual property taxes you must pay as an owner

IMI (immovable property tax)

IMI is Portugal's annual municipal property tax. It applies to all property owners regardless of residency status. Every property owner in Portugal pays IMI based on their property's taxable value and the municipal rate where the property sits.

• Urban properties: 0.3% to 0.45%
• Rural properties: 0.8%

How IMI is calculated:

IMI equals your property's taxable value multiplied by your municipality's rate. The taxable value typically sits well below market value, which keeps IMI bills lower than you might expect based on what you paid for the property.

Example calculation:

• Property taxable value: €200,000
• Municipal rate: 0.35%
• Annual IMI: €700

Payment schedule:

Your payment schedule depends on the total IMI amount due:

AIMI (additional wealth tax on property)

AIMI is an additional wealth tax that applies only to high-value property holdings. Most property owners never pay AIMI because the exemption thresholds are generous.

Thresholds:

The first €600,000 of property value per person is exempt from AIMI. For married couples jointly owning property, that exemption doubles to €1.2 million. You only pay AIMI on property value above these thresholds.

Rates:

For individuals, AIMI uses progressive rates:

For companies holding Portuguese property, AIMI applies a flat 0.4% rate on total Portuguese property value with no exemption threshold.

Example:

• Property value: €800,000
• Taxable amount after €600,000 exemption: €200,000
• AIMI due: €1,400 per year

Property taxes when buying real estate in Portugal

IMT (property purchase tax)

IMT is a one-time property purchase tax you pay before signing the deed. The rate is progressive and depends on two factors: property value and whether you're buying a primary or secondary residence.

Rates:

Residential properties face rates from 0% to 8%. Higher-value properties fall into top brackets. Lisbon and coastal markets often push buyers into higher IMT brackets due to elevated property prices.

Exemptions:

Certain properties qualify for IMT exemptions, including:

• Urban rehabilitation properties (ARU)
• Resale by real estate companies
• Acquisition by housing investment funds
• Buyers aged up to 35 years under recent special regimes
• Specific situations under the Tax Benefits Statute (EBF)

These exemptions can save substantial amounts on taxes when buying property in Portugal, particularly for first-time buyers or properties in designated rehabilitation zones.

Stamp duty (IS)

Stamp duty applies both at purchase and on mortgages. You pay this alongside IMT when completing your property transaction.

Rates:

• Property deed: 0.8% of purchase price
• Mortgage stamp duty for loan terms over 5 years: 0.6%
• Mortgage stamp duty for loan terms under 5 years: 0.5%

Stamp duty adds a meaningful cost to your total acquisition expenses. On a €300,000 property purchase with a mortgage, you'd pay €2,400 in stamp duty on the deed plus additional stamp duty on the mortgage amount.

Taxes when selling property in Portugal

Capital gains tax

Capital gains tax applies to your profit when you sell property, not to the total sale price. Your residency status dramatically affects how much you pay.

Property taxes in Portugal for foreigners selling property work differently than for residents. Non-residents pay a 28% flat rate on 50% of their capital gain. So effectively, 14% of the total gain gets taxed.

Residents face progressive rates from 12.5% to 48% depending on total income, but only 50% of the gain counts as taxable income. This means the effective rate ranges from roughly 7.25% to 24% of the total gain.

Key distinction:

Residency status significantly affects capital gains taxation. Residents also have access to reinvestment exemptions that can reduce or eliminate capital gains tax if they reinvest proceeds into another Portuguese property within specific timeframes. Non-residents typically don't qualify for these exemptions.

The 50% exclusion rule benefits both residents and non-residents, but the progressive tax system for residents means those with lower overall income pay substantially less than the flat 28% rate applied to non-residents.

Rental income taxes for property owners

Rental income in Portugal gets taxed differently depending on your residency status. Non-residents pay a flat 25% tax on rental income. Residents face progressive income tax rates from 12.5% to 48%, with the rate depending on total annual income.

You must declare rental income annually on your Portuguese tax return. Residency status determines which rate applies. Professional tax structuring can reduce your exposure, particularly for residents who can deduct certain expenses against rental income before calculating tax owed.

Property taxes by region in Portugal

Portugal uses a nationwide tax framework, but regional adjustments apply in specific areas. Property taxes in Portugal for foreigners and residents follow the same regional variations.

Madeira and the Azores

Portugal's autonomous regions offer more favourable property tax treatment. Madeira and the Azores provide an automatic 30% reduction on IMI compared to mainland rates. They also use more favourable IMT brackets, which reduces taxes when buying property in Portugal in these regions.

Mainland hotspots

Some of the best places to live in Portugal like Lisbon, Cascais, Porto, and other high-demand coastal areas push buyers into different tax situations. Properties in these locations are more likely to trigger higher IMT brackets due to elevated purchase prices. They're also more likely to cross the €600,000 AIMI threshold, bringing the wealth tax into play.

How property taxes are calculated in practice

Understanding the actual numbers helps you budget accurately for property taxes in Portugal.

IMI example

A property with a taxable value of €350,000 multiplied by a municipal rate of 0.4% equals €1,400 per year in IMI. It's worth noting that a property selling for €350,000 on the market typically has a lower taxable value. The taxable value often sits 20% to 40% below market value, which reduces your actual IMI bill.

AIMI example

An individual owning a property valued at €1,100,000 faces AIMI on the amount above the €600,000 exemption threshold. The taxable amount equals €500,000. At the 0.7% rate for the first bracket and 1.0% for amounts above €1 million, the total AIMI due comes to roughly €5,000 per year.

How and when to pay property taxes in Portugal

Portugal's tax authority issues annual IMI payment notices by April 30. The notice includes all payment details and your total amount due.

You can choose to pay the full IMI amount upfront in May if you prefer, regardless of your payment schedule. To pay your IMI tax, you need the payment details from the letter sent by the tax authority.

If you lose the letter, all payment information remains available on Portugal's Finance Portal (Portal das Finanças). To access the portal, you need one of the following:

• Your NIF (tax identification number) and Finance Portal password
• Digital Mobile Key
• Portuguese Citizen's Card

Online payment options include:

• Your bank's homebanking system
• ATM machines
• The MB Way app
• Setting up direct debit for automatic payments

In-person payment options:

You can visit any tax office (Finanças) or any CTT post office. In-person payments accept cash, card, or dated crossed cheques.

Property tax exemptions and reductions

Portugal offers both temporary and permanent IMI exemptions under specific conditions.

Temporary IMI exemption

This exemption lasts three years and applies when:

• Property value is €125,000 or less
• Previous year taxable income is €153,300 or less
• The property serves as your primary residence or rental property

Permanent IMI exemption

Permanent exemption requires:

• Household income of €15,295 or less
• Property must be your permanent residence
• Property must fall within specific valuation thresholds

Penalties for missing property tax payments

Portugal charges interest on late property tax payments. Continued non-compliance brings fines. Serious cases can lead to enforcement actions including property liens or forced sale proceedings.

The Portuguese tax authority takes payment seriously, but the system provides clear notice periods and multiple payment options to help owners stay compliant.

How tax residency affects property taxes

Tax residency triggers after spending 183 days in Portugal during a calendar year. Your residency status affects some property taxes but not others.

Residency does not affect:

• IMI (annual property tax)
• AIMI (wealth tax on property)

Residency does affect:

• Rental income tax rates
• Capital gains tax rates and available exemptions

Both residents and non-residents pay the same IMI and AIMI rates. The difference appears when you generate income from the property through rent or sale.

Common mistakes foreign buyers make with property taxes

Foreign buyers frequently underestimate IMT at purchase. The progressive rates climb quickly on higher-value properties, particularly in Lisbon and Porto. Budget for the full IMT amount before signing contracts.

Many buyers ignore AIMI exposure on high-value homes. If your property exceeds €600,000 in value, factor AIMI into your annual ownership costs from the start.

Some assume residency is required to pay property taxes in Portugal. This is incorrect. All property owners pay IMI and AIMI regardless of where they live. Only rental income and capital gains taxes vary by residency status.

Failing to plan taxes before signing contracts causes problems. Once you commit to a purchase, the tax obligations follow automatically. Run the numbers on IMT, stamp duty, and annual IMI before making your offer.

Are property taxes in Portugal considered high?

Annual property ownership costs in Portugal typically run 0.3% to 0.8% of property value through IMI. The wealth tax (AIMI) only applies above €600,000 per person.

Compared to many EU countries, Portugal's property tax burden sits in the moderate range. The system is predictable, with clear rates and payment schedules. Most property owners find the annual costs manageable relative to property values and the overall cost of living in Portugal.

Get your tax setup right from day one with Touchdown

Each journey is unique, but the goal is always the same: to help you secure residency, structure your taxes with clarity, and thrive in one of the most beautiful, forward-thinking countries in Europe.

Touchdown is Portugal's leading relocation platform. Backed by a veteran team of expert lawyers, we simplify the entire relocation journey by providing everything you need to set up and thrive in your new home through an integrated, easy-to-use platform.

Taxes are a big part of relocation and essential to get it right through an efficient set up. Book a consultation with Touchdown's tax team to review your specific situation, understand your exact obligations, and structure your property purchase to minimise tax exposure from the start.

FAQs about property tax in Portugal

How much is the annual property tax in Portugal?

Annual IMI (property tax) ranges from 0.3% to 0.45% for urban properties and 0.8% for rural properties, based on the property's taxable value. Most owners pay between €500 and €2,000 yearly depending on property value and location.

Does owning property in Portugal make you a tax resident?

No, owning property doesn't automatically make you a tax resident. Tax residency triggers when you spend 183 days or more in Portugal during a calendar year, regardless of property ownership.

What are the pitfalls of buying a property in Portugal?

Common pitfalls include underestimating IMT and stamp duty costs at purchase, buying without proper legal due diligence, ignoring ongoing AIMI exposure on high-value properties, and failing to account for slower bureaucratic processes during the transaction.

How often are property taxes paid in Portugal?

IMI is paid annually in installments based on the total amount due: once yearly for amounts up to €100, twice yearly for €100 to €500, and three times yearly for amounts over €500.