Portugal continues to attract foreign real estate investment, whether for own use, letting or resale. Non-resident investors, however, face a tax framework different from that applicable to residents, with significant changes in recent years – from taxation on acquisition to taxation of capital gains on any resale -, which should be understood before proceeding with any investment. This article forms part of the Real Estate Law area of Araújo & Associados.
Applying for a NIF
The acquisition process generally begins with applying for a NIF (tax identification number) from the Tax Authority, which is essential for signing any contract, whether a preliminary contract or a deed of purchase and sale.
IMT on acquisition – fixed rate of 7.5% for non-residents
Since 25 May 2026, with the entry into force of Decree-Law No. 97/2026 of 20 May, the acquisition of an urban property or separate unit intended exclusively for housing by non-residents is, as a rule, subject to a fixed rate of Municipal Property Transfer Tax (IMT) of 7.5%, pursuant to Article 17(10) of the IMT Code.
This fixed rate replaces the progressive rates normally applicable and rules out the usual exemptions and reductions – in particular the exemption provided for the acquisition of a lower-value main and permanent residence and the benefits associated with controlled-cost housing.
Exceptions to the fixed rate of 7.5%
The law provides for three situations in which the fixed rate of 7.5% does not apply, and the non-resident benefits from the general IMT rates. This occurs where the purchaser:
- Has been considered a tax resident in Portugal, pursuant to Article 16 of the Personal Income Tax Code (that is, someone who has previously been a tax resident in the country, even if not currently so);
- Becomes a tax resident in Portugal (Article 16 of the Personal Income Tax Code) within two years of the date of acquisition;
- Lets the property for residential purposes at a rent not exceeding the limits set out in paragraphs 2 and 3 of Article 2 of Decree-Law No. 97/2026, placing it on the rental market within six months of acquisition and keeping it let for at least 36 months (consecutive or not) during the first five years after acquisition.
Refund of tax paid
Where the condition for an exception is only met after the acquisition, i.e., where the purchaser becomes a tax resident (second exception) or enters into the tenancy agreement (third exception), a non-resident who has already paid the 7.5% rate may apply to the Tax and Customs Authority for cancellation of the difference between the tax paid and what would result from applying the general rates of Article 17(1).
The application must be submitted within six months of the date on which the purchaser becomes resident or on which the tenancy agreement is entered into, as the case may be (Article 17(11) and (12) of the IMT Code).
IMI and Additional IMI (AIMI) – annual running costs
Regardless of the owner’s nationality or residence, owning a property in Portugal entails the annual payment of Municipal Property Tax (IMI), calculated on the property’s Taxable Property Value (VPT). The rate applicable to urban properties ranges between 0.3% and 0.45%, set annually by each municipality within this range (and, in exceptional cases provided for by law, up to 0.5%); for rural properties a fixed rate of 0.8% applies.
For owners, including non-residents, whose residential property holdings exceed a certain value, Additional IMI (AIMI) also applies, levied on the sum of the VPT of the urban residential properties and building land held, with a deduction of 600,000 euros from the taxable amount in the case of individuals. Note that properties held by entities domiciled for tax purposes in countries, territories or regions subject to a clearly more favourable tax regime, or controlled by such entities, are subject to an increased IMI rate of 7.5% – a rate that does not apply to individuals.
Taxation of capital gains on resale
Until 2022, capital gains arising from the sale of property in Portugal by non-residents were taxed separately at a fixed rate of 28% on the entire gain. The State Budget Law for 2023 repealed this regime, aligning the taxation of non-residents with that of residents: currently, only 50% of the capital gain determined is taken into account for tax purposes, and this amount is mandatorily aggregated with the taxpayer’s other income and taxed at the general progressive Personal Income Tax (IRS) rates, which can reach 53% taking into account the additional solidarity rate. In order to determine the applicable progressive rate, the non-resident must declare all income obtained, including income obtained outside Portugal, although only Portuguese-source income is actually taxed in Portugal.
Unlike residents, non-residents do not, as a rule, have access to the exemption regime for reinvestment in a main and permanent residence, according to the Tax Authority’s interpretation, which reinforces the importance of adequate tax planning before any disposal.
Non-residents and the end of the real estate route to the Golden Visa
Foreign investors interested in obtaining a residence permit linked to investment should bear in mind that, since 2023, the acquisition of real estate is no longer an eligible route for the Golden Visa. This route and the investment routes currently eligible for a residence permit are described in the article Golden Visa in Portugal, available in the Immigration and Nationality area.
Foreign investor and other related matters
In addition to the tax framework described here, foreign investors should also take into account the general stages of the purchase and sale process, described in the article Buying and selling property in Portugal – process guide, and the legal guarantees applicable in the event of construction defects, where the investment concerns a new property, described in the article Construction defects – guarantees and time limits for claims.
About Araújo & Associados
Established in 1980, with offices in Porto and Lisbon, Araújo & Associados provides legal advice to real estate investors from more than 31 countries, in Portuguese, English, French, German and Spanish.
Frequently asked questions about real estate investment by non-residents
Does a non-resident always pay 7.5% IMT when buying property in Portugal?
Not necessarily. The fixed rate of 7.5% applies, as a rule, to most acquisitions of housing by non-residents since 25 May 2026, but the law provides for exceptions, in particular for those who let the property at a moderate rent or become a tax resident in Portugal within a certain period.
How are capital gains taxed if I sell the property in future as a non-resident?
Since 2023, the taxation of non-residents’ capital gains has been aligned with that of residents: 50% of the gain is aggregated with other income and taxed at the general progressive IRS rates, and no longer at the former fixed rate of 28%.
Can I benefit from the capital gains exemption for reinvestment in a main residence if I am a non-resident?
As a rule, no. According to the Tax Authority’s interpretation, non-residents are excluded from this tax benefit, unlike tax residents in Portugal.
Is it still possible to obtain a Golden Visa by buying property?
No. The acquisition of real estate has no longer been an eligible route for the Golden Visa since 2023, although other eligible investment routes remain, described in the article dedicated to the Golden Visa.
Do IMI and AIMI apply in the same way to residents and non-residents?
Yes, IMI and AIMI are levied on ownership of the property regardless of the owner’s tax residence, at the same rates and, in the case of AIMI, with the same deduction of 600,000 euros for individuals.
If I pay the 7.5% IMT rate and then meet one of the exception conditions, can I recover the difference?
Yes, the law provides for the possibility of applying to the Tax Authority for a refund of the difference between the fixed rate paid and the normal progressive rate, if the purchaser comes to meet one of the exception conditions within the legally prescribed period.
Contact us
For more information on real estate investment in Portugal by non-residents, or to book a legal consultation, you can contact us through our Porto or Lisbon offices, by telephone, email or via the form on the website. We provide legal advice in Portuguese, English, French, German and Spanish.