Portugal has moved from headline announcements to concrete legislation on higher property taxes for non‑resident buyers. The government has announced a flat 7.5% Municipal Property Transfer Tax (IMT) on most home purchases by non‑residents.
The measure was first announced by the Prime Minister on 25th September 2025. The move is part of the government’s plan to make the housing market fairer and more equitable. This was particularly for markets under pressure from second‑home and holiday‑home demand.
Housing and Infrastructure Minister Miguel Pinto Luz reassured potential buyers that this measure is not meant to discourage foreign investment. “Portugal will continue to attract international investors. This is a fair adjustment that helps redistribute wealth more effectively,” he told ECO.
Flat 7.5% IMT for non‑resident buyers
Under the draft law now before Parliament, IMT on the acquisition of homes by non‑residents will be set at a single rate of 7.5%. The rate applies to the purchase of any urban property, or autonomous fraction of an urban property, intended for housing when the buyer is classified as non‑resident for tax purposes.
Instead of benefitting from the existing progressive IMT scale for main residences, non‑resident homebuyers would always face the top rate on residential acquisitions. That scale currently runs from 2% on purchases above €104,261 up to 7.5% on homes valued at more than €1,128,287.
Government officials argue that the change is aimed at non‑resident buyers of second homes and holiday homes who currently have limited tax exposure in Portugal. It is intended to align their contribution more closely with pressures on local housing supply.
Who is exempt from the flat non‑resident rate
The proposal draws a clearer line between buyers who are genuinely based in Portugal and those who hold property primarily as a non‑resident asset.
The flat rate does not apply to:
- Individuals who qualify as tax residents in Portugal, including foreign nationals who remain in the country for more than 183 days, consecutive or not, in any 12 months beginning or ending in the relevant tax year.
- People performing public functions or commissions in the service of the Portuguese State.
- Buyers who become tax residents in Portugal within two years of the date of acquisition of the property.
The bill also creates an important exemption for homes acquired for long‑term rental at controlled price levels. Properties are excluded from the flat non‑resident IMT rate if they are:
- Intended for residential rental with a monthly rent that does not exceed the moderate rent ceiling (currently €2,300)
- Placed on the rental market within six months of purchase, and
- Rented for at least 36 months, consecutive or intermittent, during the first five years after acquisition.
Part of a wider housing and tax package
The IMT reform forms part of the government’s Construir Portugal – Arrendamento e Simplificação (Build Portugal – Leasing and Simplification) programme. This is a package of housing and regulatory measures aimed at increasing long‑term rental supply and easing access to housing for residents.
For now, the changes remain subject to parliamentary approval and subsequent implementation by the government. If adopted in their current form, they will raise upfront purchase costs for many non‑resident buyers, while offering a clearer framework and potential tax relief for those who relocate to Portugal or commit their properties to the long‑term rental market.
Key takeaways for foreign buyers:
- A flat IMT rate of 7.5% will apply to non‑resident buyers of residential property in Portugal.
- Tax residents, certain public officials, and buyers who become residents within two years are not covered by the flat non‑resident rate.
- Properties let on moderate rents under strict conditions can also fall outside the 7.5% rate, with a refund available where IMT was initially paid at the higher rate.
- The measure is part of the government’s broader housing package, aimed at improving access to housing while maintaining Portugal’s appeal for long‑term investors.
If you’re considering investing in Portuguese real estate, now is a good time to understand how these changes may affect your plans.