Taxation of Real Estate Sales in Portugal

Updated: 19 December 2022

Portugal’s Golden Visa program awards its participants with a permanent residency if they meet all the demands and buy a Portuguese property. Residency by investment sure sounds nice but there is a lot to learn about buying a house in Portugal, which is the key to getting that residency. One of the vital pieces of information one should know when getting into the Portuguese real estate market is how the Portuguese taxation system works. Some of these taxes apply only if the house you buy is your permanent residence or if it is your second home. It will be noted down whether these taxes apply to you or not.  

Taxes Paid While Buying the House

The IMT (Municipal Real Estate Transaction Tax) is paid whenever a house is bought on Portuguese soil. Its actual value however changes on the location, purpose, and price of the real estate. It must be paid no matter whether one is buying a permanent. residence or a secondary house though the rates do differ. Stamp Duty, being likely the oldest tax in Portugal at a rate of 0.8% also applies to your real estate buy. There are also many official documents regarding the sale most important of which is obviously the deed of sale. All these documents are necessary for sales of all purposes and they are all taxed at different rates. Moreover, if you secured a mortgage for your house you need to pay 0.6% of that in tax as well.

Taxes Paid After Buying the House

Of course, the taxation does not stop there. IMI or Municipal Property Tax is limited by the state, but its actual rate is up to the municipality where your house is located, up to that government limit. It can vary from 0.3% to 0.5% of the house’s price in cities and up to 0.8% in the countryside. If you intend to sell your house to get a new one or simply just because you want to, then be prepared to pay the Capital Gains Tax as well. This is meant to keep a check of your gains from selling a house and then buying one thus it takes into consideration whether you are using a house as a permanent residence or just as a secondary home. However, it needs to be paid, at varying degrees, no matter what the purpose of the house is.

In short, although all taxes must be paid by both permanent residents of Portugal and ones that use it likely as a holiday house, the exact amount of these taxes can vary according to the way one utilizes the house. Keep that in mind and expect to pay less on taxes if you just buy a secondary house for your Portuguese Golden Visa requirement. 

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