Real Estate Taxes in Portugal - Who pays and when (2024)

FAQs

Real Estate Taxes in Portugal - Who pays and when? ›

The tax rate is determined annually and varies between 0.3% and 0.8%. This tax is due by anyone who owns the property on the last day of December of the previous year. For example, if you own a property on 31 December 2021, you will have to pay the Portuguese IMI tax in 2022.

You basically multiply the value of the tax asset (TPV) with the applicable rate. Property tax rates range from 0.3% to 0.45%. While properties in rural areas are taxed at 0.8%, properties in more urban areas are taxed within the mentioned range.

Portugal charges a transfer tax as well as stamp duty

On buying a Portuguese property, you are charged a transfer tax Imposto Municipal sobre Transmissôes Onerosas de Imóveis (IMT) of up to 8% plus 0.8% stamp duty (Imposto de Selo).

Property Transfer Tax (Imposto Municipal sobre Transmissôes Onerosas de Imóveis – IMT) is paid by the buyer when there is a transfer of ownership of real estate in Portugal.

Put simply, capital gains tax in Portugal is charged on the sale of property or other assets at a rate of 28% for individuals and 25% for companies and non-residents. Residents will need to pay taxes on just 50% of their capital gains.

The tax rate is determined annually and varies between 0.3% and 0.8%. This tax is due by anyone who owns the property on the last day of December of the previous year. For example, if you own a property on 31 December 2021, you will have to pay the Portuguese IMI tax in 2022.

For non-residents, you'll pay a flat tax rate of 25%, while residents are taxed on a progressive scale from 14.5% to 48%. Like the US, the Portugal tax year is the calendar year. Returns must be filed by March 31st, and you are required to pay any additional tax owed by that date.

If you are thinking of living or working in Portugal you must fulfil one of the following conditions to obtain a tax address in Portuguese territory: remain for over 183 days, whether consecutive or not, within a 12-month period, beginning or ending in the year in which you request a tax address.

Existing residents

With the correct planning and structuring, you can legitimately create a tax-favourable position and in some cases, single-digit rates of tax, which means that Portugal can still be more favourable than most individual's home countries.

Yes, buying property in Portugal is a great investment. Portugal's real estate market offers a variety of good investment opportunities, whether you want a holiday home, a retirement property, or an investment property to rent out.

Do you pay capital gains tax on inherited property in Portugal? ›

Estate tax in Portugal

In cases where the deceased donated property during their lifetime instead of bequeathing it, additional taxes may apply. If you sell part of your estate, you may also need to pay property tax or capital gains tax. The tax rate for capital gains is 28%, which covers investment income.

You are required to pay stamp duty when purchasing a property in Portugal – unlike other countries the stamp duty is one of the lowest priced taxes you will pay. The rate of stamp duty is calculated at 0.8% of the purchase price. Stamp duty must be paid at the local tax office prior to signing the final deeds.

Passing on Portuguese property to any recipients other than your spouse, children or parents will incur a flat 10% Portuguese stamp duty, wherever they live.

Under Portugal's current law, if you are not a resident of Portugal and sell a property t/here, the entire gain is taxable. Non-resident individuals are taxed at 28%. Non-resident companies are subject to Portuguese corporation tax of 25%. Non-resident companies located in a tax haven are taxable at 35%.

Income tax rates for residents in Portugal are progressive, meaning you pay more tax the more you earn. Non-residents are taxed at a flat rate of 25% of income.

For non-residents, the tax rate depends on the type of income received, as follows: employment income is taxed at a 25 percent flat tax rate. rental income is taxed between 10 and 28 percent special tax rate. interest is taxed at a 28 percent flat rate.

The tax regime NHR in Portugal is granted for a period of 10 years non-renewable, as long as the individual continues to be considered as tax resident in Portugal during each of these 10 years. If for a year the person is not recognized as a tax resident in Portugal, then his status is not lost.

Acquiring the Portugal Golden Visa

Buying property in Portugal allows you to acquire a Portugal residence permit, as long as you stay in the country for a minimum of 14 days each two years.

PROPERTY transfer tax Portugal – BASICS

If the property is located in the Autonomous Region of Madeira or Azores, the exemption applies up to a value of €115,509. For land, the property transfer tax in Portugal is always the same fixed rate of 6.5% for urban and 5% for non-urban properties.

All US citizens and permanent residents — even those living abroad — are subject to taxation on their worldwide income, as long as they meet the minimum income thresholds.

How are retired expats taxed in Portugal? ›

If you registered as a non-habitual resident before 31 March 2020, your foreign source pension income is generally tax-free. If you are registered from April 2020 onwards, your foreign pension income is generally taxed at 10%.

The treaty provides that you won't be taxed in either country on your wages, salaries, tips, and other compensation from a Portuguese source if you're an employee of a U.S. company that has a permanent establishment in Portugal or if you live in Portugal for 183 days or more during a consecutive period of 12 months.

As an American, you need to get a Portuguese residence permit if you're planning to stay there for longer than three months. If you reside in Portugal with a proper residence permit for five years, you can then apply for permanent residency or Portuguese citizenship.

Does Portugal Allow Dual Citizenship? Portugal allows dual citizenship. Only if the applicant's home country does not allow it, the applicant may have to renounce their citizenship of their own country.

Temporary stay visas allow entry and stay in Portugal for less than a year. Temporary stay visas are valid during the entire stay and allow for multiple entries. Residency visas allow two entries and is valid for a period of 4 months.

Mainly yes, Portugal has a free healthcare system. It's free for all Portuguese citizens and residents. Citizens and residents of the country who contribute to the Social Security Fund can receive free medical care through the National Health Service, SNS.

If you're moving to (or are already in) Portugal and earning an income, you may have to pay taxes. If you reside in Portugal for 183 days or more a year, you must pay income tax on your worldwide income.

The national average price of a 2,000-square-foot home in Portugal is $278,000. Buying a house in Portugal as an American is about 40% cheaper than the U.S. median home price, which is roughly $455,000.

The country has no restrictions on foreigners looking to buy a house in Portugal. You won't have to fill in any extra paperwork or meet any criteria to buy a home per say. All you need is a VAT identification number, known as a número de identificação fiscal (NIF) or número de contribuinte in Portugal.

Is an American will valid in Portugal? ›

Yes, it is possible to leave assets in Portugal using a foreign Will as Portuguese Law recognises Wills that are made abroad.

The Portuguese inheritance law provides for the payment of a tax rate of 10%, called Imposto de Selo, on the value of the assets located in the country, which can be real estate, movable assets – such as cars or boats, or also, copyrights, shares or works of art.

Rejecting assets and contesting a will in Portugal

As heirs are protected from inheriting debts and are usually exempt from paying any tax on what they inherit, there isn't really a culture of rejecting an inheritance.

For a Portuguese mortgage, you will generally need a minimum deposit of 20% of the property's price, because the borrowing varies from 60% to 80% of the price or valuation price, depending on the lender, with loans available at a variable rate or fixed rate basis.

The rise in property prices in Portugal has been caused by growing demand from foreign buyers.

If you are the owner of an apartment, a terraced house or a home on a resort, you will be faced with monthly condominium costs, also called service charges. This amount varies per condominium of approximately € 30 - € 150 per month.

The spouse and descendants form the first category of successors. In the absence of descendants, the spouse and ascendants are the successors. It is not possible to leave the entire inheritance to someone who is not a legitimate heir, not even by making a will (Article 2156 of the Civil Code).

Inheritance and gift taxes

Donation of property is taxed under the stamp tax at 0.8%. Free acquisition of goods by individuals (inheritance and gifts) is taxed under the stamp tax at 10%.

High Rental Yields - Great properties with low prices for high quality and high rental returns. According to statistics expected gross rental yields in Portugal are among the highest in Europe, from 5% to 14% is achievable from the right property.

Residents in Portugal for tax purposes are taxed on their worldwide income at progressive rates varying from 14.5% to 48% for 2023.

How to avoid double taxation in Portugal? ›

When it comes to your US ex-pat tax in Portugal, most US expatriates worry about “double taxation.” Paying taxes to two different countries – the U.S. and Portugal. A U.S. taxpayer working overseas in Portugal may reduce U.S. taxable income and “double taxation” by claiming the Foreign Tax Credit on Form 1116.

How can you pay the tax? Payment of the IMI can be made in Portugal at the tax office, the post office and at any multi-bank ATM. If you are not in Portugal, you can make the payment via the online platform of the tax authority or via online banking of your Portuguese bank account.

The Portuguese Non-Habitual Residency status enables those who become tax resident in Portugal and are accepted as a non-habitual resident, the opportunity to receive qualifying income tax-free both in Portugal and in the country of the source of the income.

Property is taxed annually by the municipality in which it is located. Each municipality assigns a patrimonial value and assesses a rate that generally ranges from 0.5% to 1.0%. Rural properties frequently have a higher percentage of assessment but a lower value than urban properties.

Excellent tax benefits due to the Non-Habitual Resident Tax Regime. Taxes on personal income made in Portugal are fixed at 20% for a 10-year period.

According to Moody's, Portugal will not escape a correction in house prices in the near future, meaning that house prices in Portugal in 2023 could be about to drop.

How much do I need to deposit? Non-residents should know that the minimum deposit is usually about 30 percent of the purchase price. Financing institutions provide between 60 and 70 percent of the valuation price for non-residents.

For non-residents, the tax rate depends on the type of income received, as follows: employment income is taxed at a 25 percent flat tax rate. rental income is taxed between 10 and 28 percent special tax rate. interest is taxed at a 28 percent flat rate.

Since Portugal and the US both allow dual citizenship, you may keep both your Portuguese passport and your American one.

Can Americans retire in Portugal? ›

You need to apply for residency in order to retire in Portugal as an American. The process is straightforward, but it may take a while. You need to provide (1) your passport, (2) proof of income, (3) proof of health insurance, (4) criminal background check, in order to apply.

The Algarve in Portugal is one of the best places to buy property in Europe. Sun, sea, and good rental income are just some of the reasons why investors from all over the world are favouring this coastal region.

The Portuguese culture accepts well the negotiation and although the market the place is very heated, the prices of the ads embed more and more fat for negotiation. Don't be afraid to make offers below the asking price. On average a property in Portugal is sold with a discount between 5% and 10% on the price of the ad.

No, you can't buy Portuguese citizenship. However, you can obtain residency through investing in Portugal, and then apply for citizenship in five years. Investors can choose to make a property investment, a subscription in an investment fund, or a capital transfer to a Portuguese bank account.