Portugal Introduces Flat 7.5% Property Transfer Tax for Non-Resident Homebuyers

Photo: Idealista

Portugal has moved from policy announcements to draft legislation introducing higher property transfer taxes for non-resident buyers. Under a bill currently before Parliament, non-resident purchasers of residential property will be subject to a flat 7.5% Municipal Property Transfer Tax (IMT).

The measure was first announced by the Prime Minister on 25 September 2025 and forms part of a broader housing strategy aimed at easing pressure from second-home and holiday-home demand. Housing and Infrastructure Minister Miguel Pinto Luz stressed that the reform is not intended to deter foreign investment, but rather to ensure a fairer contribution from non-resident buyers.

What will change

Instead of benefiting from Portugal’s progressive IMT scale for main residences (ranging from 2% to 7.5%), non-resident buyers would always pay the top 7.5% rate, regardless of the property value. The rule applies to urban residential properties and autonomous housing units acquired by buyers classified as non-resident for tax purposes.

Who is exempt

The flat 7.5% IMT rate will not apply to:

individuals who are Portuguese tax residents, including foreign nationals spending more than 183 days in Portugal in any 12-month period;

persons performing public functions in the service of the Portuguese State;

buyers who become Portuguese tax residents within two years of acquiring the property.

An additional exemption applies to properties purchased for long-term rental at regulated rent levels. The flat rate does not apply if the property:

is rented at or below the moderate rent ceiling (currently around €2,300 per month),

is placed on the rental market within six months of purchase, and

is rented for at least 36 months (consecutive or intermittent) during the first five years of ownership.

Where IMT is initially paid at 7.5%, a refund may be available once these conditions are met.

The IMT reform is part of the government’s Construir Portugal – Arrendamento e Simplificação programme, which combines housing and regulatory measures to boost long-term rental supply and improve housing access for residents. The proposal still requires parliamentary approval, but if enacted, it will significantly increase upfront costs for many non-resident buyers while preserving incentives for relocation and long-term rental investment.