Where foreigners buy property in Portugal
Lisbon and Porto draw buyers wanting a city base and rental yield; the Algarve remains the dominant choice for holiday and retirement buyers; the Silver Coast and Alentejo attract people trading price for space and quiet. Madeira and the Azores are administratively part of Portugal but run their own reduced tax regimes in places.
Property taxes in Portugal
Portugal's transfer tax, IMT, works differently depending on your residency. If you declare the property your permanent home and commit to becoming a Portuguese tax resident, you're on a progressive scale — 0% on the first roughly €106,000, climbing through several brackets up to 8%, with a flat 7.5% on anything over about €1.15 million. But under Decree-Law 97/2026, which takes effect on 1 September 2026, any non-resident buyer of residential property instead pays a flat 7.5% IMT on the full price, with none of the lower brackets — a significant increase at lower price points specifically aimed at foreign second-home and investment buyers. You can reclaim the difference if you become a Portuguese tax resident within 2 years of buying, or if you let the property as capped-rent long-term housing for at least 36 of the first 60 months.
On top of IMT, a flat 0.8% stamp duty (Imposto de Selo) applies to every purchase deed regardless of price or bracket, and if you're financing with a mortgage, a further 0.6% stamp duty applies to the loan amount itself.
Notary and land registry fees are comparatively low in Portugal — often under €1,000 combined for a typical purchase — but almost every foreign buyer also engages an independent lawyer, commonly around 1–1.5% of the price, partly because a power of attorney is a common and useful tool for buyers who can't attend every step in person.
Annual property taxes and ongoing costs
The annual municipal property tax, IMI, is set by each council within a national band (roughly 0.3–0.45% for urban property) and applied to the property's taxable value (VPT) — a tax-assessed figure that usually runs well below market price. Owners whose total property tax value across all their Portuguese property exceeds €600,000 also owe AIMI, an additional wealth-style surcharge on the excess — relevant mainly at the very top end of the market.
Common mistakes foreign buyers make
Portugal's former Golden Visa real-estate route has been closed for several years now — property purchase itself no longer confers residency rights, a point that still trips up buyers working from older information. Budget for a Portuguese tax number (NIF), which is a prerequisite for signing anything, and is straightforward to obtain but easy to leave until too late. And if you're closing after 1 September 2026 without becoming a resident, don't be caught out by the new flat 7.5% non-resident IMT — older guides and even some agents are still quoting the pre-2026 progressive rates.