Listen, We Dropped the Ball: The New IMT Rules for Non Residents in Portugal
Okay, we’re going to be honest with you. We dropped the ball.
Earlier this year, Portugal changed the way IMT is calculated for people who are not yet tax resident in Portugal. And, rather embarrassingly, we almost gave one of our clients the wrong figures for their buying costs.
Almost.
When a client decides to put forward an offer on a property, we send them a breakdown of what their costs will look like for that specific property (based on the offer price, any amount allocated for Furniture & Fittings (a point we should talk about another time)! and whether they will have a mortgage etc).
In this example we sent our lovely clients their estimated costings (as the lawyer has the final say!) using the old IMT system, which is still used for Portuguese tax residents. About 15 minutes later, we realised our mistake, checked the new rules and sent through the corrected figures.
Thankfully, we caught it quickly. But it was a good reminder that when you are helping people buy property in Portugal, you really cannot afford to assume that the rules (and templates!) you were using a few months ago are still the rules today. So, rather than quietly pretend that never happened, we thought we would use it as an opportunity to explain what has changed, what it means if you are buying a property in Portugal while still living overseas, and what happens if your plan is actually to move here later.
So, what has changed?
Until May 2026, a non-resident buying a home in Portugal was generally subject to the same progressive IMT tables as other buyers, with the amount of tax depending on the value and intended use of the property. That changed on 25 May 2026.
Under the new rules, a buyer who is not tax resident in Portugal and is purchasing a residential property is generally subject to a flat IMT rate of 7.5%. And yes, that is a fairly significant change.
Instead of working through a series of IMT bands, a non resident buyer now starts with a much simpler calculation: 7.5% of the taxable value of the property. There are some important exceptions, which we will come to shortly, but for someone buying a home in Portugal while remaining tax resident overseas, 7.5% is now the figure that needs to be factored into the initial buying-cost calculation. And this is where it can make a surprisingly big difference.
What does 7.5% actually look like?
Let's say you are buying a property for €300,000, and for simplicity we are assuming that the purchase price is the amount used for the IMT calculation. Under the new non resident rules, the IMT would be: €300,000 × 7.5% = €22,500
For comparison, a resident buyer purchasing this same property, that falls under the standard residential table would pay considerably less IMT at this price (Cálculo: (300.000,00€ x 7%) - 9.394,50€ = 11.605,50€).
Move the property price up to €500,000, and the difference becomes even more noticeable.
A non resident buyer would pay:€500,000 × 7.5% = €37,500 against a resident who would pay €27,300.11.
So, when you are putting together your buying budget, this is not a small adjustment that can simply be tucked away in the small print. For some buyers, it can mean tens of thousands of euros of additional tax at the point of purchase.
And remember, IMT is only one part of the buying costs. There is also Stamp Duty, legal fees, registration costs and, depending on your circumstances, potentially mortgage and other professional costs to consider. There is another important point here too: IMT is generally calculated on the higher of the purchase price and the property's Valor Patrimonial Tributário (VPT), so you cannot always assume that simply multiplying the price you have agreed with the seller by 7.5% will give you the final figure. This is why we always recommend having your lawyer or tax professional confirm the actual figures before you get too attached to the numbers in a spreadsheet!
But what if I am planning to move to Portugal?
This is where things get a little more interesting. The new rules recognise that not everyone buying a home in Portugal while living overseas intends to remain a non resident forever. Perhaps you are buying your future retirement home. Perhaps you are planning to relocate once you finish work. Perhaps you want to buy now and make the move in a year or two.
If you subsequently become tax resident in Portugal within two years of purchasing the property, there is a mechanism allowing you to apply to have the difference between the 7.5% IMT you originally paid and the amount that would have been payable under the normal IMT rules cancelled and returned to you. In other words, the 7.5% does not necessarily have to be the final IMT cost if your plans genuinely are to relocate to Portugal.
How can you claim some of your IMT back?
There are a few important steps to keep in mind.
First, you need to actually become tax resident in Portugal within two years of the property purchase. Simply spending more time here, having a Portuguese NIF or owning a property in Portugal does not automatically make you tax resident. This is a tax residency question, so it is something you should discuss with your accountant or tax adviser based on your own circumstances. But usually if you spend more than 186 days in Portugal, you fall into being a Portuguese tax resident, and should be acting as such.
Once you have become tax resident, you then have six months from the date you become resident to submit the relevant request to the Portuguese Tax Authority (Autoridade Tributária) for the difference to be cancelled and returned.
The amount you can recover is not necessarily the entire 7.5%. The legislation provides for the difference between the IMT you originally paid and the amount that would have resulted from applying the normal IMT rates. Exactly how much that difference is will depend on the property value and the applicable IMT rules for your circumstances.
So, if you are buying a property now but genuinely intend to make Portugal your home, don't assume that the initial 7.5% calculation tells the whole story. Keep your paperwork, keep track of the dates and, most importantly, don't forget about the six month window once you become resident.
There is also a separate provision for certain properties that are placed into qualifying residential rental arrangements, although the conditions are more specific and include limits on the rent and a minimum rental period. If you are buying as an investment, this is something to discuss with your tax adviser rather than assuming the standard rules apply.
So, did we really drop the ball?
Yes. A little bit.
But we think there is something useful in admitting it. Portugal's property and tax rules change. Sometimes they change quickly. Sometimes there are new rules, exceptions, transitional arrangements and different rules depending on whether you are resident, non resident, buying a permanent home, buying a second home or investing.
And that is exactly why we don't think buying a property in Portugal should be about finding a house, falling in love with it and then working out the numbers afterwards. The numbers matter.
Before you make an offer, you should have a realistic idea of your purchase costs, your tax position and how the property fits into your plans for Portugal. And if your plans change later, that's okay too. In fact, plenty of our buyers initially come to the Algarve looking for a holiday home or second home before eventually deciding that they would quite like to stay here a little more permanently. Just make sure you understand what those changing plans could mean from a tax perspective.
And, as our little near-miss proved, always check the rules as they stand today rather than assuming yesterday's figures still apply!
As always, if you are looking for a property in Algarve and would like more information on our service, then please get in touch!
We hope that this article has been helpful, but please note the information in this article is intended as a general guide to the 2026 IMT rules and is not tax or legal advice. Your actual costs will depend on your individual circumstances, the property and its taxable value. We recommend confirming your figures with your Portuguese lawyer or tax adviser before completing a purchase.
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