Portugal prepares IMT tax increase for foreign homebuyers

Photo: mcs.pt

The government of Portugal plans to increase the IMT rate for non-residents, reports Idealista. In this way it is planned to increase fairness in the market and redistribute the burden. The changes will not affect emigrants of Portuguese origin. Experts expect a decrease of investment attractiveness, and lawyers say about controversial points from the side of European legislation.

The property transfer tax when buying housing (IMT) now varies depending on the type of object and can reach 8%. The new initiative assumes an additional burden on foreigners who do not have resident status in the country. Minister of Infrastructure and Housing Miguel Pinto Luz said that this measure is included in the future fiscal package that the government will present in the coming weeks. It is aimed not at increasing budget revenues as the main goal, but at achieving more balance between the interests of the state and housing affordability for citizens of Portugal.

It is emphasized that emigrants, that is Portuguese living abroad, will not fall under the new rules. The authorities intend to separate different categories: those keeping connection with the country, participating in the economy and those acquiring property exclusively as a second home or investment. In this the government sees an element of fairness: the tax burden will be higher for those who do not make regular contribution to the system.



In the review of Madeira Corporate Services it notes that this measure will become part of a more extensive package aimed at adjusting the situation in the housing market. Among other changes is the reduction of VAT to 6% for construction projects worth up to €648,000. The same threshold is proposed to apply to new rental housing – on condition that the monthly rent does not exceed €2,300. The government explains the choice of limits by average market conditions in Lisbon, Porto and other municipalities with high pressure.

For landlords tax incentives are provided: income at moderate prices will be taxed at a reduced rate. Such a benefit should make renting more attractive and increase supply in the market. For tenants it is proposed to increase tax deductions. Rental expenses can be deducted in a larger amount – the limit will increase to €900 in 2026 and to €1,000 in 2027.

Lawyers of Madeira Corporate Services highlight that the most controversial part of the package is connected with the increase of IMT for non-residents. This decision becomes a departure from the principle of equal treatment, which for many years was applied in the sphere of real estate taxation. The Constitution of Portugal in Article 13 establishes equality of all before the law and prohibits the introduction of advantages or restrictions by territorial sign. The increase of IMT only for foreigners can be challenged in courts. At the level of the European Union an additional barrier may become the principle of free movement of capital, established in Articles 63–66 of the Treaty on the Functioning of the EU.



The European Court has repeatedly canceled measures that established discriminatory tax regimes for residents and non-residents. Portugal will have to prove that the introduction of the surcharge is necessary for the protection of public interests, as well as the absence of softer alternative measures.

For foreign buyers this means an increase of initial expenses and increased legal uncertainty, which is combined with a low level of rental profitability. According to Global Property Guide, the average indicator in the country fell from 4.96% in 2024 to 4.57% in the second quarter of 2025. The highest level is in Setúbal – 5.08%, in second place Braga – 4.74%. Then follow Faro (4.73%), Porto (4.52%) and Aveiro (4.49%). In Lisbon profitability is estimated at 3.86%. For comparison: in Georgia the average rental yield of housing is 8–9%, and branded hotel real estate provides even higher result. This segment is considered one of the most stable in the market and demonstrates stability even in periods of geopolitical turbulence.

Analysts note that the changes are able to reduce the attractiveness of Portugal for investors, despite favorable climate and infrastructure conditions. Moreover, the country is already observing a decrease of demand for rental housing.