Buying a home in Portugal just got noticeably more expensive if you don’t already live here — and won’t move here fast. Decreto-Lei n.º 97/2026, published in the Diário da República on 20 May 2026, rewrites the property transfer tax (IMT) for anyone who isn’t a Portuguese tax resident, replacing the progressive rates everyone used to pay with a flat 7.5% charge on residential purchases.
What the decree actually does
The measure inserts a new clause into the IMT code applying specifically to non-residents buying urban property earmarked for housing. A rate of 7.5% is established on the acquisition, by non-residents, of urban property or an autonomous fraction of urban property destined exclusively for housing. That flat rate replaces the usual progressive brackets and abolishes the deductions and exemptions residents normally rely on — including the exemption for lower-value primary homes.
The rule is tied to tax residency, not nationality or passport. An EU citizen who hasn’t yet registered as a Portuguese tax resident pays exactly the same 7.5% as a buyer from outside the bloc. Land, rural property and commercial premises aren’t touched — the surcharge applies only to housing.
If you buy a house in Portugal and aren’t a tax resident, you now pay a flat IMT rate of 7.5%, without any discount. On a €300,000 apartment, that’s roughly double what a resident buying a second home would owe under the old progressive scale — a gap of around €10,000–€12,000 depending on the property’s value.
The refund isn’t automatic — and it isn’t free
The decree does build in an escape hatch, but it works backwards from what most buyers expect. The 7.5% rate doesn’t apply where the buyer had already been considered a tax resident, becomes a tax resident within two years of the acquisition date, or lets the property for residential use at a rent not exceeding €2,300, with the lease signed within six months of purchase and kept in place for at least 36 months during the first five years. The Tax Authority can, on request, cancel the amount corresponding to the difference between the tax paid and what would result from the normal rates.
In practice, that means most non-resident buyers pay the full 7.5% at the notary and then have to actively apply to Finanças afterwards to get money back — there’s no automatic discount at the point of sale. Timing your move matters enormously here: someone who arrives, establishes residency, and only then buys property is treated as a resident buyer from day one, while someone who purchases before their residency is formally established pays the higher rate first and seeks a refund later — a route that still works but ties up capital for up to two years.
The rental exception is narrower than it sounds. It’s aimed at moderate, long-term housing, not holiday lets — the property has to go on the market as a residential lease within six months, capped at €2,300 a month, and stay tenanted for three years out of the first five. Short-term or Alojamento Local strategies won’t qualify.
Why the government is doing this
This isn’t an isolated tax grab. The IMT change sits inside a much larger housing package — alongside a temporary 6% VAT rate on qualifying construction and rehabilitation, new incentives for landlords who let at moderate rents, and a reworked affordable-rental scheme. The decree alters the VAT, IRS, IRC and IMT codes and creates new leasing and partial-VAT-refund regimes, all framed as measures to increase housing supply for people who actually live and work in Portugal, rather than cool foreign demand outright — though the effect on non-resident buyers is the same either way.
What to watch
Effective dates matter here: most of the package, including this IMT change, is generally understood to take hold around 1 September 2026, though some administrative elements — like the extended 30-day payment window for IMT — were already in force by late May. Anyone with a deed pending should confirm the exact timing with their lawyer or the local Serviço de Finanças before signing, since a deed signed ahead of the cut-off would still follow the old progressive scale.
For foreigners planning a relocation, the practical lesson is sequencing: establishing tax residency before or shortly after a purchase — something covered in our /relocation/ hub — can be the difference between paying the flat rate outright and reclaiming it later, or avoiding it altogether. Buyers should also factor the surcharge into their total budget alongside stamp duty (0.8%) and annual IMI, and get tailored advice from a Portuguese tax professional before committing to a purchase contract. GrowIN Portugal’s /services/ team can help connect buyers with accountants and lawyers experienced in this exact scenario.
The bottom line: Portugal hasn’t closed its doors to foreign buyers, but it has made clear that residency — not just ownership — is now part of the price of a good deal.
Sources
This article was produced with AI assistance and editorial oversight in line with our editorial policy. It is general information, not legal or tax advice.