Property Taxes in Portugal in 2024: a Complete Guide (2024)

Property taxes forPortugal residents and non‑residents

InPortugal, both individuals and legal entities are considered taxpayers. Thestatus ofatax resident or non-resident influences tax rates.

When renting out aproperty, residents pay aprogressive income tax of14 to48%, depending ontheir annual income. Non-residents are subject toaflat rate of25%; thetax only applies toincome derived within Portugal.

New tax residents ofPortugal can obtain aspecial tax status called Non-Habitual Resident (NHR) and save onproperty ownership expenses.

Thetax year inPortugal runs fromJanuary 1st toDecember 31st. Tax returns are filed fromApril 1st toJune 30th ofthefollowing year onthetax authority's website.

Taxes onproperty purchase and sale

Tax rates forproperty owners depend onthevalue and location ofthereal estate, as well as theowner’s status.

Inthefirst quarter of2023, theaverage cost ofhousing inPortugal is €2,481 per m². InLisbon, real estate prices are stable fornow, while inSantarém and Braga, they have been growing.

Buying property forrental purposes is most profitable inthecountry’s inland regions, such as Sanrarém.

Taxes onproperty purchase. Themunicipal tax onproperty transfer is called Imposto Municipal sobre aTransmissão Onerosa de Imóveis (IMT). It ranges from0 to8%, depending ontheproperty's value and type. Thebuyer pays thetax beforesigning thesales agreement.

If theproperty is located inrural areas, IMT is 5%. Commercial properties are subject toa6.5% tax regardless oflocation.

Those who purchase buildings ofnational interest or shares ofoffshore companies that own real estate inPortugal are exempt frompaying IMT.

Aprogressive tax scale is applied toresidential properties inurban areas.

IMT rates inPortugal

Theannual property tax is called theimmovable property tax, or IMI (Imposto Municipal sobre Imóveis). Therate depends onthelocation ofthereal estate and ranges from0.3 to0.5% ofthemarket value forurban properties and 0.8% forrural properties.

Real estate owners valued up to€125,000 are exempt frompaying thetax if their annual income is less than €153,300. Additionally, owners ofpremises undergoing reconstruction funded bythemunicipal budget are exempt fromIMI for3—5 years.

When selling aproperty, theowner pays capital gains tax. If theseller is aresident ofPortugal, they pay tax ononly half oftheprofit fromthetransaction. Non-residents are charged tax onthefull capital gain amount.

When residents sell their primary residence topurchase another property, they are exempt fromcapital gains tax. If thenew property costs less than thesold one, thetax is applied tohalf ofthedifference inprice.

Retirees and residents over 65 can invest theprofit inapension fund or an insurance company. However, this must be done within six months afterthetransaction.

Imposto de Selo, stamp duty is paid when purchasing, gifting, inheriting, or renting property and amounts to0.8% ofthetransaction amount. Real estate purchase inthename ofan organisation is notsubject tostamp duty.

Examples ofproperties forsale inPortugal

Portugal, Lisbon

from€520,000

Tourist apartments inthecenter ofLisbon withguaranteed income

48+ m²

1–2

1

Portugal, Funchal

€675,000+

Apartments inanew residential project onthecoast ofMadeira

212+ m²

2–4

See Also

Travel Insurance for Portugal – AXA Schengen

2–3

Wealth tax inPortugal

Wealth tax is called Adicional Imposto Municipal sobre Imóveis (AIMI). It is applied toproperties that cost more than €600,000. AIMI rate forindividuals ranges from0.7 to1%, while legal entities pay 0.4%.

Forproperties above€1 million, individuals and organisations pay aflat rate of1%. If spouses file ajoint declaration, wealth tax is levied onproperties valued above€1.2 million.

Wealth tax rates inPortugal

Taxes oninheritance and gift ofreal estate

Forany property transfers, be it purchase, rent, gift, or inheritance, astamp duty of0.8% is charged.

Theinheritance tax inPortugal was cancelled in2004. If real estate is inherited byaspouse, children, parents, or grandchildren, theinheritor pays astamp duty of0.8%. Inother cases, an additional stamp duty of10% is applied. Forinstance, if someone inherits ahouse fromanon-relative, thetotal stamp duty forthem topay will be 10.8%.

Gift tax is also notcharged inPortugal. Similar toinheritance, beforetransferring property as agift, thestamp duty of0.8% or 10.8% must be paid, depending ontherecipient’s relationship totheproperty's previous owner.

Property rent taxes inPortugal

InPortugal, properties are rented out withacontract. Thedocument must be registered withthetax authority if thecontract is signed forover one month. Theowner pays astamp duty of10% oftherental amount.

Owners also pay taxes ontheir rental income. Non-residents are subject toaflat rate of25%. Residents pay progressive income tax rates according totheapplicable scale.

Rates fortherental income tax are thefollowing forPortuguese residents:

• up to€7,091— 14.5%;
• €7,091 to€10,700— 23%;
• €10,700 to€20,261— 28.5%;
• €20,261 to€25,000— 35%;
• €25,000 to€36,856— 37%;
• €36,856 to€80,640— 45%;
• €80,640+— 48%.

When calculating theincome fromrent, utility payments and repair expenses are deducted fromtherental income, provided there are corresponding receipts.

Tenants do notpay taxes. Aside fromthecontractual payment, their additional expenses may include asecurity deposit equal totwo months' rent.

Toobtain residency inPortugal withaD7 visa, one needs torent aplace withalong-term agreement. There are norequirements regarding theprice or location oftheproperty.

In2023, therental yield fromresidential real estate inPortugal increased by1% compared tolast year and reached 6.6%.

Theannual profitability fromrent inPortugal bythecity is thefollowing:

• Santarém— 7.6%;
• Coimbra— 5.9%;
• Braga— 5.6%;
• Funchal— 5.2%;
• Setúbal— 5.1%;
• Porto— 4.7%;
• Aveiro— 4.3%;
• Lisbon— 3.8%.

Lisbon, Aveiro and Porto tend tobe theleast profitable interms ofrental properties. However, these regions have lower investment risks duetothehigh rental demand.

How tobecome ataxpayer inPortugal and get benefits

Foreign property owners inPortugal only apply forNIF, atax identification number, throughatax representative. This rule applies tonon-EU citizens.

Aperson withPortugal residency or citizenship can become atax representative foraforeigner— this could be alawyer, accountant, or aforeigner’s friend. Thetax representative should be present when theforeigner submits their documents.

Documents required forobtaining aNIF inPortugal:

1. Passport withavalid national or Schengen visa.
2. Proof ofhaving aregistration address inPortugal, forinstance, autility payment receipt.

Afterobtaining aNIF, aforeigner does notbecome atax resident bydefault. They start paying taxes inPortugal only when they:

• live inthecountry foratleast 183 days per year;
• rent or own real estate and live init, even if they don’t spend 183 days inPortugal.

Property owners can save onthetax payment if they become Non-Habitual residents. This status is available tonew tax residents and is valid for10 years. It allows paying aflat tax instead ofaprogressive one:

• 20% forhighly qualified professionals whom aPortuguese company employs;
• 10% forretirees who get pensions fromanother country.

Foreigners withtheNHR status do notpay dividends, royalties, capital gain, or rental income tax.

Other expenses forproperty maintenance inPortugal

Key takeaways onproperty taxes inPortugal

1. Foreign property owners pay taxes inPortugal regardless oftheir tax status inthecountry.
2. Purchase or renting ofreal estate is one oftheconditions forobtaining aresidency permit inPortugal withaD7 visa.
3. Duringreal estate transactions, two taxes are charged: theproperty transfer tax and thestamp duty. Theproperty transfer tax is calculated based ontheproperty's value and typically ranges from5 to10%. Thestamp duty is aflat rate of0.8%.
4. Rental yields are subject toincome tax. Fortax residents, it is calculated based onaprogressive scale ranging from14.5 to45%. Non-residents pay aflat rate of25%.
5. InPortugal, foreign property owners who use their real estate as their permanent residence inthecountry become tax residents. This means they are subject toPortugal's applicable tax regulations and obligations. This includes reporting their worldwide income and complying withthePortuguese tax system.

Frequently asked questions