If you’re buying property in Portugal and you’re not a tax resident here, there’s a new cost to factor in. The government has introduced a flat 7.5% IMT on all residential purchases by non-residents, scrapping the progressive scale that used to apply to everyone equally.
We’ve been fielding questions about this from clients since the announcement back in September 2025. Some are worried. Some are confused. A few have asked us whether it’s still worth buying here at all. (It is. But your budget needs updating.)
Here’s what’s going on, and what we think you should do about it.
What is IMT, and why does it matter?
IMT (Imposto Municipal sobre Transmissões Onerosas de Imóveis, if you want the full Portuguese) is the transfer tax you pay when you buy property here. It’s a one-off cost, due before you sign the final deed at the notary. The tax is calculated on the purchase price or the property’s official tax value, whichever is higher.
Previously, it worked like income tax: lower rates on cheaper properties, rising through brackets up to a maximum of 7.5% on anything above roughly €1 million. That applied whether you lived in Portugal or not. Add in stamp duty at 0.8%, notary and registration fees, and legal costs, and you’d typically budget 6 to 8% of the purchase price for closing costs.
That’s still the case for residents. For everyone else, the maths looks different now.
So what’s different?
Non-residents pay 7.5% on everything. No brackets. No lower rate for a €300,000 apartment. Just a flat 7.5%, full stop.
The change sits inside a bigger package called Construir Portugal (“Build Portugal”), which also includes VAT cuts for construction, rental tax incentives, and licensing reforms. The government says non-residents should contribute more to local taxation while Portugal wrestles with its housing shortage. Portuguese emigrants are exempt from the higher rate, so this is specifically aimed at international buyers and foreign investors, not Portuguese nationals living abroad.
According to Idealista’s reporting on the draft law, Housing Minister Miguel Pinto Luz framed it as “a fair adjustment” while insisting Portugal still welcomes foreign investment.
What does 7.5% actually look like compared to the old rates?
This is the question everyone asks, so we put the numbers side by side.
| Purchase Price | Old IMT (Progressive) | New IMT (Flat 7.5%) | Extra Cost |
| €300,000 | ≈ €8,000 to €12,000 | €22,500 | +€10,500 to €14,500 |
| €500,000 | ≈ €28,000 to €35,000 | €37,500 | +€2,500 to €9,500 |
| €800,000 | ≈ €48,000 to €55,000 | €60,000 | +€5,000 to €12,000 |
| €1,500,000 | ≈ €105,000 to €112,500 | €112,500 | Marginal |
| €2,000,000 | ≈ €150,000 | €150,000 | Zero. Rate was already 7.5% |
(Old IMT ranges reflect the progressive scale for secondary residences. Exact figures depend on property classification and whether it’s mainland Portugal or the autonomous regions.)
If you’re buying a villa in Quinta do Lago for €3 million, this legislation changes nothing for you. If you’re buying a two-bed apartment in Lagos for €400,000, it’s very relevant. The €300,000 to €800,000 bracket is where the new rate bites hardest.
We ran the numbers recently for a British couple looking at a three-bed townhouse in Tavira, listed at €480,000. Under the old progressive scale, their IMT would have been roughly €30,000. Under the flat rate, it’s €36,000. That €6,000 difference didn’t kill the deal, but it did change how they thought about their renovation budget. Every euro counts when you’re planning a move to another country.
Are you actually a “non-resident”?
For IMT purposes, you’re non-resident unless you tick at least one of these boxes:
You spend more than 183 days per year in Portugal, or you have a habitual residence here, meaning a permanent home that shows you intend to live in the country.
Most of our clients don’t meet either condition when they buy. They’re still living in the UK or the US, they’ve found a property they love during a viewing trip, and they’re purchasing before the actual move. Under the new rules, that means 7.5%.
The exceptions are real, and they matter
The legislation isn’t a blanket penalty with no way around it. Three scenarios can bring the rate down.
Become a tax resident within two years. Buy now as a non-resident, relocate within 24 months, and you can claim back the difference between 7.5% and whatever the progressive rate would have been. According to Global Lawyers’ analysis of the legislation, the refund applies when “the buyer becomes a tax resident in Portugal within two years” of the purchase.
We see this situation regularly. A couple buys during their second trip to the Algarve, moves over the following year, and qualifies for the refund. But you have to actually follow through. Miss the deadline and the money stays with the tax office. No extensions, no exceptions.
Rent the property at moderate prices for at least 36 months. Essential Business reported that the exception applies when the property is rented for residential purposes for at least 36 months (consecutive or not) within the first five years after purchase. The rent cap is €2,300 per month. This works for investment buyers, but the compliance requirements are strict. “I planned to rent it out” won’t be enough if you can’t show 36 months of actual tenancy within that window.
You’re already a tax resident, a Portuguese emigrant, or hold certain official roles. If any of these apply, the flat rate doesn’t touch you. MdME Lawyers confirmed that Portuguese emigrants are explicitly carved out of the higher rate under Bill no. 47/XVII/1.
Where does the law stand right now?
Parliament approved the final texts of the Construir Portugal package on 20 February 2026, as reported by Portugal Resident and confirmed by Lusa news agency. PSD, CDS-PP, and Iniciativa Liberal voted in favour. The Socialists voted against. Chega abstained.
The legislative authorisation has passed. What’s left is for the government to publish the implementing decree-laws that spell out the practical details: procedures for claiming refunds, documentation requirements for the rental exception, exact timelines. We’re watching closely because that’s where the questions our clients actually ask will get answered.
Our advice right now: budget on the basis of 7.5%. If you later qualify for a refund or exemption, treat that as money back in your pocket rather than something to plan around.
Our take
We’d be lying if we said this doesn’t sting. An extra €6,000 to €15,000 in closing costs on a mid-range property is real money. It changes budgets. It affects renovation plans. For some buyers on the edge of affordability, it might push a particular property out of reach.
But Portugal hasn’t stopped being a fantastic place to live and buy property. The climate, the safety, the food, the cost of living compared to where most of our clients are moving from. All of that still holds. What the new IMT does is make it more important than ever to get your numbers right before you commit, and to work with people who’ll tell you what things actually cost rather than what sounds encouraging.
If relocation is on the cards, get your residency timeline mapped out. Talk to a tax adviser early. Not after you’ve signed the promissory contract.
And don’t let the tax change rush you into a bad decision. We’ve watched people panic-buy over the years because they thought a window was closing. It rarely ends well. A well-chosen property at a fair price in the right location will serve you better in the long run than a hasty purchase made under pressure. Every time.
This is what we do. We’re not selling you a property from our portfolio. We’re finding the right one for you, negotiating the price, and making sure you understand every cost before you commit.
Ready to talk?
Book a discovery call, or drop us a message. No obligation, no sales pitch. Just a proper conversation about what you’re looking for.
Maya & Joe The Buyer’s Agent Portugal
