Property taxes in Portugal

About 20 years ago, the Portuguese economy made a serious economic breakthrough, which had a positive impact on the welfare of the country, including its real estate market. And over the past few years, this country, led by Lisbon, has been called one of the key centers for European investment. That is why so many foreigners buy real estate here, especially since the Golden Visa program is working successfully in Portugal.

Taxes in Portugal

Taxes are paid here by both local citizens and foreigners who have real estate, business, etc. in the country. At the same time, the Portuguese tax system is considered one of the most loyal in Europe. In addition, this country has an agreement with Russia on the exclusion of double taxation. Therefore, if you are permanently residing in Portugal (over 183 days a year), you need to pay only local taxes.

Tax on the purchase of real estate

The amount of tax rates on housing in Portugal is calculated based on the value of the property and its location. In addition, another factor is taken into account: whether the house is being bought as the main dwelling or is being considered as a second property.

To pay all the necessary fees in Portugal, you need to open an account in one of the country's banks. To do this, a foreigner must obtain an individual tax number from the local tax authorities, as well as provide a Portuguese bank with a birth certificate, passport and proof of residence in Russia (for example, an extract from the house book at the place of residence).

When purchasing real estate in Portugal the buyer needs to pay a tax on the transfer of ownership (Imposto Municipal sobre as Transmissoes or IMT), the rate of this tax can reach up to 8% - the exact amount depends on the amount of the transaction. This is the main tax that should be taken into account when buying a house or apartment in Portugal, since spending on it will cost the most. In addition, the size of the IMT tax rate varies based on whether it will be the main dwelling or a second home. The place of purchase also matters – the tax base in mainland Portugal and in Madeira and the Azores is different.

There are also cases when this tax is not applied: when residential real estate is purchased, which will become the main place of residence and its cost is less than 92,407 euros if we are talking about the mainland. For real estate located in autonomous regions (in Madeira or the Azores), this limit is 115,509 euros. Also, for example, you can get an exemption from paying IMT tax in the event that a city building that is part of the municipal action plan for the restoration of the city is acquired.

If the cost of the object (permanent residence) in the continental part of Portugal exceeds the minimum amount, the tax will be:

• 2% (property value from 92,407 to 126,403 euros)


• 5% (property value from 126,403 to 172,348 euros)


• 7% (property value from 172,348 to 287,213 euros)


• 8% (property value from 287,213 to 574,323 euros)


• 6% (the value of the property is more than 574,323 euros)

If the object is on the mainland of Portugal, in which they do not live permanently:

• 1% (property value up to 92,407 euros)


• 2% (property value from 92,407 to 126,403 euros)


• 5% (property value from 126,403 to 172,348 euros)


• 7% (the cost of real estate from 172,348 to 287,213 euros)


• 8% (property value from 287,213 to 550,836 euros)


• 6% (the value of the property is more than 550,836 euros)

When the property is located in Madeira or the Azores, then regardless of whether it is the main home for living or not, the IMT will be:

• 0% (the cost of real estate is up to 115,509 euros)


• 2% (property value from 115,509 to 158,004 euros)


• 5% (property value from 158 004 to 215 435 euros)


• 7% (property value from 215,435 to 359,016 euros)


• 8% (property value from 359,016 to 717,904 euros)


• 6% (the value of the property is more than 717,904 euros)

IMT must be paid by the buyer even before the conclusion of the contract of sale, since Portuguese notaries always require confirmation of payment of this tax (as well as stamp duty, the amount of which is 0.8% of the value of the object) even before the conclusion of the transaction and the transfer of the property to the buyer.

If the buyer plans to take out a loan or mortgage to purchase a new home, a stamp duty on a bank loan will also be charged. This happens when the loan amount becomes available on his current account. The amount of the fee will depend directly on the term of the loan: if up to 5 years, the rate is 0.5%, if longer, it will be 0.6%. At the same time, interest on loans granted for the purchase, construction or repair work in their own homes will be exempt from this stamp duty.

Buying a property in Portugal also involves other expenses: registration and notary fees (2.5% of the cost of the object). Translation services will cost about 100-200 euros. Real estate in Portugal can be bought by proxy (Procuração), issued by a lawyer. It is not difficult to make such a power of attorney at a local notary, and its cost will be 50-75 euros.

Property taxes in Portugal

Annual taxes

A homeowner in Portugal needs to pay the Municipal Property Tax (IMI) annually, which is levied starting in May. IMI is calculated on the basis of the real taxable value of the object (VPT) indicated in the land register and in real estate documents. The rate of this tax also depends on the year of construction of the purchased housing and its area. It is set annually in each municipality (VPT x IMI rate) in the amount of:

- from 0.3% to 0.45% for urban buildings

- 0.8% for rural buildings

You can find out how much you will need to pay the IMI tax using a special online calculator.

You can also count on exemption from IMI if the property is intended for your own and permanent housing and its estimated value does not exceed 125 thousand euros in VPT, and the total annual family income should be less than 153,300 euros. The same applies to renting real estate on a permanent basis. Under these conditions, tax exemption is automatic and granted for a period of 3 years.

The wealth tax was introduced in Portugal in 2017 – it is levied based on the cadastral value of real estate in the country, regardless of where the owner is an official resident for tax purposes. This annual tax must be paid in the amount of 0.3% for Portuguese real estate worth more than 600,000 euros. In the case of married persons, as well as civil spouses, the total threshold for the value of the property increases to 1.2 million euros.

Real estate maintenance costs

In Portugal, the payment of utility bills costs approximately 1 euro per 1 sq.m of area monthly. That is, for a house of 250 sq.m. you will need to pay at least 250 euros, and for an apartment of 70 sq.m. – about 70 euros per month. On average, electricity will cost 40-50 euros per month, water - 20 euros. The cost of a large gas cylinder, which the family has enough for a couple of months, is 50 euros. TV costs -30 euros, telephone and Internet – 15 euros: garbage collection – 8 euros. But prices may vary depending on the specific municipality.

It is possible to conclude a contract with a real estate maintenance company that will clean, maintain the garden, pool, building and its engineering systems in proper condition, as well as track monthly and annual utility bills.

Tax on the rental of real estate

In order for a foreigner in Portugal to be able to rent out the purchased property, it is necessary to obtain an appropriate permit (Licença de Alojamento Local or Licença de Utilização Turística). The tax legislation of the country provides for a fairly high tax on profits received from renting out real estate, which is 28%.

At the same time, the owner's expenses are also taken into account (which are deducted from the amount of profit): payment for condominium services, annual property tax, major repairs, subject to the provision of all invoices. Amendments to the law on the possibility of writing off such expenses as electricity, water and gas are also being considered.

Property taxes on sale

When selling real estate, residents of Portugal pay a tax on 50% of profits. For example, if a resident sells an apartment for 60,000 euros, the tax will be charged only for half of the amount of 30,000 euros. The amount of profit is also added to the total annual income of the citizen, after which the final calculation is taxed at the appropriate rate. For non-residents, the rate is fixed and amounts to 28% of the profit. It is important to take into account that when paying the resale tax, the repairs made can be deducted from the profit – provided that all necessary invoices are provided.

The tax on the sale of real estate does not need to be paid if the main housing is sold, after which all income is invested in the purchase of new real estate, which will also become an object for permanent residence. But if it turns out to be cheaper, you need to pay tax on the difference between the cost of sale and purchase. Pensioners and residents who are over 65 years old have the right to reinvest capital gains in a pension fund or insurance company within 6 months after the sale of the property.

Gift and inheritance tax on real estate

Donation or inheritance of real estate in Portugal is not taxed. But it is worth considering that this applies only to close relatives (spouses, children, parents, grandparents, grandchildren), therefore, if the giver and the recipient of the property are distant relatives, then the property is subject to stamp duty, which is 10%.

Thank you for your help in preparing the material:

Evgeny Berezin, CEO of the company MENU Portugal

Oksana Mateush, head of the company Riviera Portugal

Oleg Rilyan, partner of the company Amber Star Real Estate