The New 7.5% IMT: What Decree-Law 97/2026 Changes for Non-Residents
For most of Portugal's history as a destination for foreign property buyers, non-residents paid the same Imposto Municipal sobre as Transmissões Onerosas de Imóveis (IMT) — the municipal property transfer tax — as Portuguese citizens. The rate was progressive: 0% on urban properties up to €97,064 (the first-home threshold), then rising through a series of brackets to a maximum of 6% on properties above approximately €1 million, with a flat 7.5% applying only to properties held in offshore or blacklisted jurisdictions. The system was transparent, relatively affordable compared to equivalent taxes in France, Germany, or the UK, and made Portugal one of Europe's more attractive property markets for international buyers.
Decree-Law 97/2026, signed into force on 20 May 2026 as part of the government's Construir Portugal housing package, fundamentally alters that equation. From 1 September 2026, any non-resident purchasing residential urban property in Portugal pays a flat 7.5% IMT on the full purchase price — regardless of the property's value and regardless of whether it is a primary or secondary home. The policy rationale is explicitly redistributive: the government wants to discourage speculative foreign demand for residential property, which it credits in part for driving house prices beyond the reach of Portuguese earners, particularly in Lisbon, Porto, and the Algarve. Whether this diagnosis is accurate is debated among economists, but the legal reality is clear: from September 2026, buying property as a non-resident in Portugal is significantly more expensive than it was six months earlier.
To understand the magnitude of the change, compare the pre- and post-September position on a representative purchase. A non-resident buying a €600,000 Algarve villa before September 2026 would have paid approximately €33,000 in IMT under the progressive schedule (roughly 5.5% effective rate). After September 2026, the same buyer pays €45,000 — a 36% increase in transfer tax on an identical transaction. On a €1.2 million property — within reach for many of the Golden Visa investors and wealthy American or British retirees who make up a large portion of Portugal's premium property market — the difference is even starker: roughly €55,000 under the old progressive structure versus €90,000 at the flat 7.5% rate.
Full Cost Breakdown: What a Non-Resident Actually Pays to Buy Property in Portugal
IMT is the largest but not the only acquisition cost for a property buyer in Portugal. A non-resident completing a purchase after 1 September 2026 faces a total acquisition cost structure that typically runs to 9.5–10.5% of the purchase price when all transaction taxes and professional fees are included. Understanding each component is essential before budgeting.
IMT (7.5% from September 2026) is the primary transaction tax and the one that has changed. It is calculated on the higher of the declared purchase price and the Valor Patrimonial Tributário (VPT), the taxable assessed value determined by the Finanças for each property. In most cases the purchase price exceeds the VPT, so IMT is calculated on the agreed price. Imposto do Selo (Stamp Duty) is levied at 0.8% of the purchase price on residential acquisitions — this is unchanged by the Construir Portugal package and applies equally to residents and non-residents. On a €500,000 purchase, Stamp Duty adds €4,000.
Notary and land registry fees are modest but non-trivial. Notary fees for a €500,000 transaction typically run to €1,200–1,800, and land registry fees add another €500–800. Both are set by official fee schedules and do not vary between providers. Legal fees for a buyer's lawyer — strongly recommended and, for non-Portuguese-speaking buyers, functionally essential — typically run to 1–1.5% of the purchase price for a standard transaction, though some firms quote fixed fees starting around €3,000 for straightforward purchases. Real estate agent commissions in Portugal are paid by the seller, not the buyer, so the buyer does not typically pay agency fees. The total acquisition cost for a non-resident buying a €500,000 residential property after September 2026 is therefore approximately €45,000–50,000 in non-recoverable transaction costs before any mortgage arrangement fees. Budget accordingly before committing to a purchase price.
There is also the ongoing cost of property ownership: Imposto Municipal sobre Imóveis (IMI), the annual municipal property tax, is levied at 0.3–0.45% of the VPT for urban buildings (the rate varies by municipality). For a property with a VPT of €300,000 (which may correspond to a market value substantially higher), annual IMI runs to €900–1,350. Non-residents pay IMI at the same rates as residents. Additionally, non-resident rental income from Portuguese property is taxed at a flat 28% (or, optionally, at progressive rates if that produces a lower bill). Capital gains on property sold within the EU/EEA may qualify for reinvestment relief; gains on property held by non-residents are taxed at 28% without the 50% reduction that applies to resident sellers.
Exemptions: Who Can Avoid the 7.5% Rate
The Decreto-Lei 97/2026 includes several exemptions from the flat 7.5% non-resident rate that are directly relevant to the wealthy expat buyer. The most important is the residency exemption: buyers who become Portuguese tax residents within two years of the acquisition date are not subject to the 7.5% rate. Where a buyer has already paid IMT at 7.5% and subsequently establishes tax residence within the two-year window, they are entitled to a refund of the difference between the 7.5% paid and the progressive rate that would have applied to a resident buyer. The refund is claimed through the Finanças portal with supporting documentation of tax residency establishment.
A second exemption covers buyers who commit the property to residential letting at regulated rents. Specifically, if you purchase as a non-resident but rent the property to tenants at a monthly rent not exceeding €2,300, sign a tenancy agreement within six months of purchase, and maintain the property in qualifying residential letting use for at least 36 months during the first five years of ownership, the 7.5% rate does not apply — you pay the standard progressive IMT applicable to resident buyers. This exemption is primarily aimed at institutional landlords providing housing supply, but a non-resident individual buyer who genuinely intends to rent the property at market rates below the €2,300 threshold can benefit from it. The conditions are strict and must be maintained; failure to comply triggers retroactive IMT liability at 7.5% plus interest.
Portuguese tax residents purchasing their permanent primary residence continue to benefit from the full standard progressive IMT schedule with its 0% initial threshold and are unaffected by the new rate. EU citizens and non-EU citizens are treated equally under Decree-Law 97/2026: the distinction is between Portuguese tax residents and non-residents, not between EU and non-EU nationals. This is important: a British, American, or Australian buyer who has already established tax residence in Portugal — for example, through the D7 passive income visa or the D8 digital nomad visa — pays the standard progressive rate, not the 7.5% non-resident rate.
The Legal Buying Process: NIF, Promissory Contract, Completion
The legal mechanics of buying property in Portugal are unchanged by Decree-Law 97/2026. The process follows a well-established sequence that, for an organised non-resident buyer working with a good lawyer, typically takes six to twelve weeks from offer acceptance to notarial completion. Understanding each stage prevents the delays and miscommunications that commonly affect foreign buyers unfamiliar with the Portuguese system.
The Número de Identificação Fiscal (NIF) is the absolute first step. Without a Portuguese NIF — a tax identification number — you cannot open a Portuguese bank account, sign legal contracts in Portugal, or complete a property purchase. Non-residents obtain a NIF through a Portuguese consulate in their country of residence or at a Finanças office in Portugal. Non-EU buyers must appoint a Portuguese tax representative (a resident who accepts fiscal correspondence on your behalf) to obtain the NIF as a non-resident. Many property lawyers offer this service as part of their fee package. Allow two to four weeks to obtain the NIF if applying through a consulate, or it can often be done in a single day at a Finanças office if you are already in Portugal. For a full step-by-step guide to the NIF, see our NIF guide.
Once the NIF is in hand, the standard buying sequence is: informal offer (typically made through the selling agent, not legally binding), negotiation of price and key terms, then signing of the Contrato de Promessa de Compra e Venda (CPCV) — the promissory contract. The CPCV is a legally binding agreement that fixes the price, completion date, and conditions. It typically requires a deposit of 10–30% of the purchase price from the buyer. If the seller withdraws after signing the CPCV, they must return double the deposit; if the buyer withdraws, they forfeit the deposit. The CPCV is signed before a notary or witnessed by a lawyer, though it does not itself transfer title. Title transfers at the Escritura Pública — the notarial deed — where IMT and Stamp Duty must be paid before or on the day of signing. The deed is then registered with the Conservatória do Registo Predial (land registry), which formally confirms ownership.
Due diligence before the CPCV is critical. Your buyer's lawyer should verify: that the seller holds clean registered title, that there are no mortgages, liens, or charges registered against the property, that the property's Caderneta Predial (land registry certificate) matches what is physically being sold, that any construction or renovation has building permits (licença de construção) and a habitation licence (licença de utilização), and that the property's energy certificate (certificado energético) has been issued. For rural or mixed-use properties, additional checks on agricultural designations and planning restrictions apply. These checks typically take two to four weeks and should not be skipped even on apparently straightforward transactions.
Mortgages for Non-Residents: What Portuguese Banks Offer in 2026
Portuguese banks do lend to non-resident buyers, but the terms are meaningfully less favourable than those available to residents. The headline constraint is loan-to-value (LTV): non-residents are typically limited to 70% LTV, meaning a minimum deposit of 30% of the purchase price. This compares to the 80% LTV generally available to Portuguese tax residents purchasing a primary residence. For a €600,000 property, a non-resident mortgage therefore requires a minimum cash deposit of €180,000 before transaction costs — a total initial outlay of approximately €225,000–235,000 once IMT, Stamp Duty, legal, and notary fees are included.
Variable-rate mortgages linked to 12-month Euribor dominate the Portuguese market, though fixed-rate products for terms of 5, 10, or 15 years are increasingly available. As of mid-2026, 12-month Euribor sits around 2.3–2.5%, and banks typically add a spread of 0.8–1.5% for non-resident borrowers — producing effective interest rates of approximately 3.1–4.0% on standard non-resident mortgages. Portuguese banks will generally require evidence of income sufficient to service the mortgage at a stressed rate, typically assessed using a ratio of monthly debt service to net income of no more than 35–40%. For foreign-currency earners (USD, GBP), the currency mismatch between income and mortgage repayments is a genuine risk: a USD-earning American borrowing in euros faces exchange rate exposure on every monthly payment.
The major Portuguese banks active in non-resident mortgage lending are Caixa Geral de Depósitos (the state bank, with the widest branch network), Millennium BCP, Novo Banco, and Santander Portugal. All require a Portuguese NIF and a Portuguese bank account before processing a mortgage application. Most require a Portuguese bank account to be held with them specifically if the mortgage is being arranged through their branch network. The mortgage application process typically takes four to eight weeks and requires extensive documentation: proof of income for the past two to three years, tax returns, bank statements, employment contracts or self-employment proofs, and a completed application form. Pre-approval (aprovação de crédito) can be obtained before identifying a specific property, which strengthens your negotiating position as a buyer.
Strategic Timing and the Residency Exemption
The single most impactful decision a non-resident buyer can make in 2026 is whether to complete their purchase before or after 1 September 2026. Transactions notarially completed before that date are subject to the pre-existing progressive IMT schedule, which for a €600,000 property produces approximately €33,000 in IMT versus €45,000 under the new flat rate. The saving of €12,000 on that transaction is real but requires a legally completed Escritura Pública before the September 1 deadline — not merely a signed CPCV or an agreed price. Given that the buying process typically takes six to twelve weeks end-to-end, buyers who have not yet identified a property have limited time to close before the deadline without taking significant risks on due diligence timelines.
The more strategically significant decision for buyers considering a permanent move to Portugal is whether to establish tax residency before completing the purchase. As noted above, buyers who become Portuguese tax residents within two years of purchase can claim a refund of the differential IMT. But there is a more direct approach: establish tax residency in Portugal first — through the D7 visa, D8 visa, or another route — and buy the property as a resident. This eliminates the 7.5% rate entirely and subjects the purchase to the standard progressive schedule. For a high-value purchase (€800,000 or above), the difference between the 7.5% non-resident rate and the approximately 6% effective rate under the progressive schedule is €12,000 or more — a sum that more than offsets the cost of accelerating a visa application. This strategy requires coordination between immigration advisers and tax lawyers to ensure the timing is correctly structured, particularly because Portuguese tax residency has implications for worldwide income taxation and, for Americans, interaction with the US-Portugal tax treaty.
For buyers who will remain non-residents permanently — those purchasing a holiday home with no intention of relocating — the 7.5% rate is unavoidable from September 2026 unless the letting exemption applies. For this group, the economics of Portuguese property must be recalculated in the new environment. Portugal's absence of wealth tax and inheritance tax remain compelling advantages over France, Spain, or Italy for a high-net-worth second-home owner, and the overall acquisition cost for Portugal (approximately 9.5% of purchase price) still compares favourably to France (7–8% plus notaire fees, totalling around 10–12%) and Italy (9–12%). The change reduces but does not eliminate Portugal's attractiveness as a market, particularly at the premium end where buyers are driven by quality-of-life factors as much as by pure investment returns.
Frequently Asked Questions
When does the 7.5% flat IMT for non-residents come into force?
The flat 7.5% rate enters into force on 1 September 2026 under Decree-Law 97/2026 of 20 May 2026. Completions signed before that date are subject to the previous progressive rate structure. If you have already exchanged contracts (CPCV) but are completing after September 1, you are likely subject to the new rate unless you can demonstrate tax residency.
Can I avoid the 7.5% IMT by becoming a Portuguese tax resident?
Yes. The 7.5% rate does not apply to Portuguese tax residents. Buyers who purchase as non-residents and subsequently establish Portuguese tax residence within two years of purchase can claim a refund of the excess IMT paid. The more tax-efficient approach is to establish residency before the purchase is completed. Establishing Portuguese tax residency has broader tax implications — particularly for Americans — that require professional advice.
What is the total cost of buying property in Portugal as a non-resident in 2026?
Budget approximately 9.5–10.5% of the purchase price in non-recoverable acquisition costs: 7.5% IMT, 0.8% Stamp Duty, and 1–1.5% in legal, notary, and registry fees. On a €500,000 property that is roughly €45,000–52,000. On a €1 million property it is €90,000–105,000. These costs are paid in cash at or before completion and cannot be financed through a mortgage.
Can non-residents get a mortgage in Portugal in 2026?
Yes, but on stricter terms than residents. Non-residents are generally limited to 70% LTV (30% deposit minimum), loan terms of up to 25 years, and rates approximately 0.2–0.5% higher than resident borrowers. Major lenders include Caixa Geral de Depósitos, Millennium BCP, Novo Banco, and Santander Portugal. A Portuguese NIF and bank account are required before any mortgage application can be processed.
Does the 7.5% IMT apply to all property types?
No. The flat 7.5% rate applies to urban residential property only — apartments, villas, and townhouses classified as residential. Commercial property, office buildings, agricultural land, and rustic property remain subject to the standard non-residential IMT rates (6.5% for urban commercial, 5% for rustic). Mixed-use properties are apportioned: the residential portion is subject to 7.5%, the commercial portion to the standard rate.