Portugal property tax for UK expats: what you pay to buy, own, let and sell

At the deed: IMT and stamp duty

IMT is computed on the higher of the price and the tax value (valor patrimonial tributário, VPT), by slices, with the 2026 brackets of the State Budget:

Add stamp duty of 0,8 % of the price and the registration fee (Casa Pronta 375 €, 700 € with a mortgage). A 300 000 € main home bought by a resident costs about 10 540 € of IMT and 2 400 € of stamp duty. Under 35 and buying a first main home: no IMT up to 330 539 €.

Compared with England: SDLT on a £300,000 only home is £5,000 (0 % to £125,000, 2 % to £250,000, 5 % above); on a second home the 5 % surcharge adds £15,000, and a non-UK-resident buyer pays 2 % more. Portugal is cheaper for a resident buying a main home, more expensive for a non-resident buying a holiday flat.

• 10 540 € IMT on a 300 000 € main home (resident); 22 500 € if bought while non-resident
• 0,8 % stamp duty on every purchase
• 0,3 – 0,45 % IMI a year on the tax value, which is usually 30–60 % below market price
• 600 000 € per person of tax value before AIMI starts

Every year: IMI and AIMI

IMI is the council tax equivalent: 0,3 % to 0,45 % of the VPT for urban property, the rate chosen by each municipality every year and published on the Finanças portal, 0,8 % for rural land. It is paid in May (up to 100 €), May and November (100–500 €) or May, August and November. Because the VPT is a formula value, the IMI on a 300 000 € flat is typically 400–800 € a year — below most English council tax bands. A main home with VPT up to 125 000 € and household income up to 153 300 € is exempt for three years after purchase (EBF, art. 46.º) — not available to non-residents.

AIMI adds 0,7 % on the sum of your residential VPTs above 600 000 € per person — a couple filing jointly deducts 1,2 million — 1 % on the slice above 1 million and 1,5 % above 2 million. Companies pay 0,4 % from the first euro on residential property, 7,5 % if based in a listed tax haven. A British couple with two Portuguese homes worth 1,6 million on the market and 900 000 € of VPT pays nothing if they opt for joint AIMI taxation.

There is no UK equivalent; conversely Portugal has no annual charge on second homes beyond IMI (councils may triple the IMI on homes empty for more than a year).

Letting: 25 %, or less for long leases

Rent from a home let on a permanent lease is taxed at 25 % on the net rent (after IMI, condominium charges, insurance, maintenance — not mortgage interest), falling to 15 % for leases of five to ten years, 10 % for ten to twenty, 5 % beyond twenty (IRS Code, art. 72.º). Leases signed from 2024 at a rent more than 50 % above the reference rent for the area lose the reductions. The landlord registers the lease with Finanças and pays stamp duty of 10 % of one month’s rent. Short-term lodging (alojamento local) is business income under a licence, taxed on 35 % of turnover in the simplified regime (50 % in containment areas).

A UK resident who lets Portuguese property declares the rent in Portugal at these rates (the treaty gives Portugal the first right, art. 6) and again in the UK with credit. A Portuguese resident who keeps a UK buy-to-let does the mirror image: UK Self Assessment under the non-resident landlord scheme, then annex J in Portugal at 25 % or progressive rates, with credit for the UK tax.

Selling: half the gain, or an exemption

The gain (price less indexed cost, purchase costs, improvements of the last twelve years and selling costs) enters your income at 50 % and is taxed at the progressive rates — for residents and, since 2023, for non-residents alike. A main home sold by a resident is exempt if the proceeds, net of any mortgage repaid, buy another main home in Portugal or the EU/EEA within 36 months (or 24 months before); sellers who are retired or over 65 may put the proceeds into an annuity or pension product within six months instead.

The treaty leaves the gain on Portuguese property to Portugal (art. 13); a UK-resident seller declares it in the UK too and credits the Portuguese tax. UK property sold by a Portuguese resident is taxed first in the UK (report within 60 days), then in Portugal with credit — see capital gains Portugal vs UK.

Inheritance and gifts

Portugal has no inheritance tax: transfers on death or by gift carry stamp duty of 10 % on the VPT, and spouses, children, grandchildren and parents are exempt. A property gifted or inherited also carries 0,8 % stamp duty on the transfer. The UK, by contrast, taxes a long-term UK resident’s worldwide estate at 40 % above £325,000 — including the Portuguese villa — for up to ten years after leaving, and UK-situated property for ever. The two systems do not overlap much between spouses and children; they do for gifts to nieces, partners not in a registered union, or friends.

Buying as a company or through a UK company

A Portuguese company buying residential property pays IMT at the ordinary scale (10 % if controlled from a tax haven), AIMI at 0,4 % from the first euro, and IRC 19 % on rents and gains. A UK company is a non-resident owner: IMI, AIMI 0,4 %, 25 % IRC withholding on rents, and the 7,5 % non-resident IMT rate. For a family home there is rarely a case for a company; for a portfolio of rentals the arithmetic can work, and our accountants run it before the purchase.

Questions from British buyers