Authored by the expert who managed and guided the team behind the Portugal Property Pack
Everything you need to know before buying real estate is included in our Portugal Property Pack
IMT and IMI are two essential taxes that every property buyer in Portugal must understand before making their investment.
IMT is a one-time property transfer tax paid during the purchase process, while IMI is an annual municipal property tax that continues throughout ownership. These taxes can significantly impact your total investment cost, especially for foreign buyers who need to budget for both upfront and ongoing expenses.
If you want to go deeper, you can check our pack of documents related to the real estate market in Portugal, based on reliable facts and data, not opinions or rumors.
IMT is a one-time transfer tax ranging from 0% to 8% for primary residences and up to 7.5% for secondary homes, paid before signing the deed.
IMI is an annual municipal tax ranging from 0.3% to 0.45% for urban properties and 0.8% for rural properties, based on the property's official tax value.
| Tax Type | Payment Frequency | Tax Rate | When Paid | Based On |
|---|---|---|---|---|
| IMT (Primary Residence) | One-time only | 0% - 8% | Before deed signing | Purchase price or tax value |
| IMT (Secondary Residence) | One-time only | 1% - 7.5% | Before deed signing | Purchase price or tax value |
| IMI (Urban Properties) | Annual | 0.3% - 0.45% | Year after purchase | Official tax value (VPT) |
| IMI (Rural Properties) | Annual | 0.8% | Year after purchase | Official tax value (VPT) |
| AIMI (Additional IMI) | Annual | 0.7% - 1.5% | For high-value properties | Total portfolio over €600,000 |
| Stamp Duty | One-time only | 0.8% | With IMT payment | Purchase price |
| Offshore Entity Purchase | One-time only | 10% | Before deed signing | Purchase price |
Fact-checked and reviewed by our local expert
João Morais 🇵🇹
Founder | Real Estate Advisor, at Wilderness Investments
What exactly does IMT mean in the context of buying property in Portugal?
IMT stands for Imposto Municipal sobre Transmissões Onerosas de Imóveis, which is Portugal's property transfer tax.
This is a one-time tax that you pay as the buyer when purchasing real estate in Portugal. The tax is calculated based on either the purchase price or the property's official tax value, whichever is higher.
IMT must be paid before you can sign the property deed at the notary office. Without proof of IMT payment, you cannot complete your property purchase in Portugal. The notary will require this documentation as part of the legal transfer process.
As of September 2025, IMT rates vary significantly depending on whether you're buying the property as your primary residence or as a secondary home. The Portuguese government uses this tax structure to encourage homeownership for residents while generating revenue from investment properties.
It's something we develop in our Portugal property pack.
How is IMI different from IMT when it comes to Portuguese real estate?
IMI and IMT serve completely different purposes in Portugal's property tax system.
IMT is a one-time payment you make when buying the property, while IMI is an annual tax you pay every year for as long as you own the property. Think of IMT as a transaction cost and IMI as an ownership cost.
IMT is calculated as a percentage of the property's purchase price or tax value, with rates that can reach up to 8% for primary residences and 7.5% for secondary homes. IMI, on the other hand, is calculated as a percentage of the property's official tax value (VPT), with much lower rates ranging from 0.3% to 0.8% annually.
The payment timing is also different. You pay IMT before completing the purchase, but IMI payments only begin the year after you acquire the property. This means if you buy in December 2025, your first IMI bill arrives in April 2026.
When do you need to pay IMT and at what stage of the property purchase?
You must pay IMT before signing the property deed (escritura) at the notary office.
The payment typically happens during the weeks leading up to your scheduled deed signing appointment. Your lawyer or real estate agent will usually handle this process for you, but you need to provide the funds in advance.
The notary will not proceed with the property transfer until they receive proof that IMT has been paid. This makes IMT a critical step in the Portuguese property purchase timeline, and delays in payment can postpone your completion date.
Most buyers pay IMT within 30 days of signing the purchase agreement (CPCV), giving enough time to complete the bureaucratic process before the final deed signing. Portuguese tax authorities must process the payment and issue the necessary documentation for the notary.
How is IMT calculated in Portugal and what are the tax brackets?
IMT calculation uses progressive tax brackets based on the higher value between your purchase price and the property's official tax value (VPT).
For primary residences, the rates start at 0% for properties under €92,407 and increase progressively. Properties valued between €92,407 and €126,403 are taxed at 2%, while those between €126,403 and €172,348 face a 5% rate.
The rates continue climbing for higher-value properties: 7% for properties between €172,348 and €287,213, 8% for those between €287,213 and €574,323, then 6% for properties between €574,323 and €1,102,920, and finally 7.5% for properties exceeding €1,102,920.
| Property Value Range | Primary Residence Rate | Secondary Residence Rate |
|---|---|---|
| Up to €92,407 | 0% | 1% |
| €92,407 - €126,403 | 2% | 2% |
| €126,403 - €172,348 | 5% | 5% |
| €172,348 - €287,213 | 7% | 7% |
| €287,213 - €574,323 | 8% | 7.5% |
| €574,323 - €1,102,920 | 6% | 7.5% |
| Over €1,102,920 | 7.5% | 7.5% |
What is the standard rate of IMT for residential properties, and does it change for primary versus secondary homes?
IMT rates vary significantly between primary and secondary residences in Portugal.
For primary residences, you benefit from a 0% rate on the first €92,407 of value, which can result in substantial savings. Secondary residences start at 1% even for lower-value properties, eliminating the tax-free threshold entirely.
The most common IMT rates you'll encounter are 2% to 8% for primary residences and 1% to 7.5% for secondary homes, depending on your property's value. Rural properties face a flat 5% rate regardless of use, while properties purchased through offshore entities are taxed at a flat 10% rate.
This rate difference reflects Portugal's policy of encouraging permanent residency while generating revenue from investment and vacation properties. The savings on primary residences can amount to thousands of euros, making residency status a crucial factor in your purchase decision.
Don't lose money on your property in Portugal
100% of people who have lost money there have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.
Are there exemptions or reductions in IMT for first-time buyers or permanent residents?
As of September 2025, Portugal offers significant IMT exemptions for young first-time buyers.
First-time buyers under age 35 are completely exempt from both IMT and stamp duty when purchasing their first property. This exemption can save thousands of euros, especially on higher-value properties where IMT rates reach 6% to 8%.
If you're buying as a couple and only one person is under 35, you still receive a 50% reduction in both IMT and stamp duty. Some municipalities also offer additional IMT reductions for permanent residents or properties below certain value thresholds.
The age requirement is strict - you must be under 35 on the date of the property purchase. The property must also be your first real estate acquisition, and you cannot have previously owned property in Portugal or elsewhere.
Permanent residents may qualify for additional municipal exemptions depending on the local government's policies, property value limits, and intended use requirements.
When do you start paying IMI after buying a property in Portugal?
IMI payments begin the year following your property purchase in Portugal.
If you complete your property purchase in 2025, your first IMI bill will arrive in April 2026. The tax is calculated based on the property's official tax value (VPT) as of December 31st of the year before the payment is due.
Portuguese municipalities send IMI bills annually in April, giving property owners clear notice of their obligations. The tax covers the full calendar year, regardless of when during the previous year you purchased the property.
This timing gives new property owners a full year to settle into their investment before facing annual tax obligations. However, you should budget for IMI payments from your first year of ownership to avoid financial surprises.
How is IMI calculated, and what percentage range should a buyer expect depending on location?
IMI is calculated by multiplying your property's official tax value (VPT) by the municipal rate set by your local government.
As of September 2025, municipal rates for urban properties range from 0.3% to 0.45% annually. Each municipality sets its own rate within this range, so location directly impacts your annual IMI costs.
For example, a property with a VPT of €200,000 in a municipality charging 0.4% would result in an annual IMI bill of €800. The same property in a municipality charging 0.3% would cost €600 annually.
Rural properties face a fixed rate of 0.8% regardless of municipality, making them more expensive from an IMI perspective. This higher rate reflects the different infrastructure and service costs associated with rural property ownership.
It's something we develop in our Portugal property pack.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Portugal versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
Are there differences in IMI rates between urban and rural properties?
Yes, Portugal maintains distinct IMI rate structures for urban and rural properties.
Urban properties benefit from lower rates ranging from 0.3% to 0.45% annually, with the exact rate determined by each municipality. Rural properties face a standardized rate of 0.8% across all municipalities, making them significantly more expensive from an annual tax perspective.
This rate difference means that a rural property with a VPT of €150,000 would generate an annual IMI bill of €1,200, while an urban property of the same value might only cost €450 to €675 annually depending on the municipality.
The classification between urban and rural is determined by the property's official designation in the land registry, not simply by its location. Some properties in small towns may still qualify as "urban" if they're in designated development areas.
How often is IMI paid, and what are the payment deadlines during the year?
IMI is paid annually with payment schedules that depend on the total amount owed.
For IMI bills up to €100, you make a single payment by May 31st each year. Bills between €100 and €500 can be split into two installments, due May 31st and August 31st.
Properties with IMI bills exceeding €500 qualify for three installments: May 31st, August 31st, and November 30th. In some years, the Portuguese government extends these deadlines - for example, the 2025 deadline was extended to June 30th.
- Single payment (up to €100): Full amount due by May 31st
- Two installments (€100-€500): 50% by May 31st, 50% by August 31st
- Three installments (over €500): One-third each by May 31st, August 31st, and November 30th
- Late payment penalties: Interest charges apply for missed deadlines
- Payment methods: Bank transfer, direct debit, or in-person at designated locations
Are there any exemptions or reductions for IMI, for example on low-value properties or for families with children?
Portugal offers several IMI exemptions and reductions for qualifying property owners.
The most significant exemption applies to permanent homes with a VPT of €125,000 or less, where household income doesn't exceed €153,300 annually. This exemption lasts three years and can be extended to five years in some municipalities.
Families with annual income up to €16,398 and total property VPT of €71,296 or less qualify for permanent IMI exemptions. Some municipalities also offer 50% reductions for up to five years for qualifying residents.
| Exemption Type | Income Requirement | Property Value Limit | Duration |
|---|---|---|---|
| Standard Permanent Home | ≤ €153,300/year | ≤ €125,000 VPT | 3-5 years |
| Low-Income Permanent | ≤ €16,398/year | ≤ €71,296 VPT | Permanent |
| Municipal Reduction | Varies by municipality | Varies by municipality | Up to 5 years |
| Large Family | 3+ children | Varies by municipality | Varies |
| Rehabilitation Projects | No income limit | Property under renovation | During renovation |
How should a foreign buyer factor in both IMT and IMI when calculating the total cost of owning a property in Portugal?
Foreign buyers must budget for IMT as an upfront cost and IMI as an ongoing annual expense throughout property ownership.
For a €300,000 secondary residence, expect to pay approximately €21,000 in IMT plus €2,400 in stamp duty upfront. Annual IMI costs would range from €900 to €1,350 depending on the municipality, plus potential AIMI if your total property portfolio exceeds €600,000.
Calculate your total five-year ownership cost by adding the one-time IMT payment to five years of IMI payments. This gives you a realistic picture of tax obligations beyond the purchase price. Don't forget to include potential AIMI charges if you're building a substantial property portfolio in Portugal.
Foreign buyers should also consider that IMT exemptions for first-time buyers under 35 can provide substantial savings, potentially eliminating €20,000+ in transfer taxes. However, most foreign investors won't qualify for permanent residence exemptions in their first year of ownership.
It's something we develop in our Portugal property pack.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Understanding IMT and IMI taxes is crucial for successful property investment in Portugal, as these costs can represent 10% or more of your total investment when combined with other fees.
As of September 2025, young first-time buyers enjoy the most favorable tax treatment, while foreign investors should budget carefully for both upfront IMT costs and ongoing IMI obligations throughout their ownership period.