Article by Miriam Sequeira, Lawyer at IAS - International Atlantic Services

Understanding the IMT

The Municipal Property Transfer Tax (IMT) is a key consideration for anyone purchasing real estate in Portugal. IMT is calculated based on the property value and its intended use, whether as a:

• Primary residence – intended for the buyer’s permanent use
• Secondary residence – for personal use but not primary
• Rental investment – properties purchased for leasing or investment purposes

For foreign investors, understanding the IMT is crucial, as it directly impacts the total acquisition cost and can significantly influence the financial feasibility of a property purchase. IMT must be paid before the property registration is completed at the Land Registry, making early planning essential.

Recent Changes for Non-Residents

On September 25, 2025, the Portuguese government announced a higher IMT rate for non-resident buyers. This measure is part of a broader effort to ensure market fairness and maintain accessibility for residents, while continuing to attract foreign investment.

The new rates do not apply to:

• Portuguese emigrants living abroad
• Foreign citizens who are residents in Portugal

Objective: Ensure that non-resident buyers contribute proportionately to local taxation, while balancing the dynamics of the Portuguese property market and avoiding undue impact on local residents.

Who is Exempt from the IMT Increase

Certain buyers and property types are excluded from the new IMT rates, including:

• Foreign residents in Portugal
• Portuguese emigrants living abroad
• Properties acquired for moderate-rent housing, defined as:

1. Sale price ≤ €648,000
2. Monthly rent ≤ €2,300

It is essential for investors to confirm whether their intended purchase qualifies for these exemptions to avoid unexpected costs.

Implications for Investors

For non-resident buyers, the IMT increase has several practical implications:

• Higher upfront costs: Non-residents will face increased tax payments upon purchase.
• Investment reassessment: The financial viability of secondary residences or rental properties may need to be recalculated.
• Budget adjustments: Previous cost projections must be updated to account for the higher IMT rates.
• Compliance obligations: Accurate reporting and adherence to legal procedures are crucial to avoid penalties.

While the IMT increase introduces additional considerations, it does not prevent foreign investment. Strategic planning can help investors optimize their acquisition while remaining compliant with Portuguese law.

Examples of the IMT Increase

Example: A non-resident buying a €500,000 property will pay €40,000 in IMT instead of €35,000 if they were a resident or emigrant – an additional €5,000 upfront cost.

Recommended Actions for Investors

To navigate the new IMT framework effectively, foreign investors should:

1. Consult a legal expert to fully understand the implications for their individual situation.
2. Reassess financial feasibility, taking into account the higher tax rate and potential impact on rental returns or resale value.
3. Verify exemptions, particularly for moderate-rent housing, to potentially reduce the tax burden.
4. Plan early: Ensure all necessary documentation is in order prior to property acquisition, including proof of residency, tax identification, and financing arrangements.

Proactive planning minimizes risks and ensures a smooth acquisition process in line with Portuguese regulations.

How International Atlantic Services Can Assist

At International Atlantic Services, we provide comprehensive legal guidance and support for foreign investors, including:

• IMT and tax analysis: Detailed assessment of how the IMT increase affects your investment.
• Transaction structuring: Optimizing property acquisitions to ensure efficiency, compliance, and financial feasibility.
• Documentation support: Assistance with all legal and administrative requirements to prevent delays or complications.
• Strategic advice: Guidance on investment planning, including exemptions, financing, and long-term property management.

Our experienced team helps investors navigate the Portuguese real estate market confidently, minimizing risks and maximizing opportunities.