IMT for non-residents: when does the 7.5% rate apply?
The purchase of a property intended exclusively for housing by a non-resident buyer is now, as a rule, subject to an IMT (property transfer tax) rate of 7.5%.
In this situation, the exemptions or reductions provided for the purchase of a primary residence do not normally apply.
This change should be taken into account before signing the promissory contract (CPCV), as it can significantly increase the total cost of the purchase.
When does the higher rate apply?
In general terms, the 7.5% rate applies when:
• the buyer is not tax resident in Portugal;
• the property is an urban property or an autonomous unit;
• the property is intended exclusively for housing.
The tax is calculated on the value used as the basis for the IMT assessment, usually the higher of the purchase price and the tax registration value (VPT).
Are there exceptions?
Yes. The higher rate does not apply when any of the exceptions provided for by law are met, namely when the buyer:
• has been considered tax resident in Portugal;
• becomes tax resident in Portugal within two years of the purchase;
• allocates the property to residential letting at a moderate rent within a maximum of six months after the purchase.
In the case of letting, the property must remain let for at least 36 months, consecutive or not, within the first five years.
In 2026, the moderate monthly rent may not exceed €2,300.
Is the IMT difference refunded automatically?
No.
When the buyer becomes tax resident after the purchase or subsequently allocates the property to letting at a moderate rent, they must submit an application to the Tax Authority.
The application allows the annulment of the difference between:
• the IMT paid at the 7.5% rate;
• the tax that would be due under the general rates.
The application must be submitted within six months of the buyer becoming tax resident or signing the lease agreement, as applicable.
Missing this deadline may jeopardise the recovery of the difference.
What if the buyer is domiciled in a low-tax jurisdiction?
The 7.5% rate does not override the 10% rate applicable to purchases covered by the regime for buyers domiciled in countries, territories or regions with a clearly more favourable tax regime.
The buyer’s tax residence and domicile should therefore be confirmed before the purchase.
What is the deadline for paying IMT?
The general deadline for paying IMT has been extended to 30 days after the assessment.
If the tax is not paid within that period, the assessment lapses and a new assessment will have to be issued.
In any case, payment must be settled before the deed or the act transferring the property.
Why is this change especially relevant in the Algarve?
The Algarve property market has a significant presence of foreign and non-resident buyers.
Before buying a home in Almancil, Loulé or elsewhere in the Algarve, it is important to calculate the applicable IMT and check whether the buyer may benefit from any exception, namely by moving their tax residence to Portugal or allocating the property to residential letting.
What should be analysed before the promissory contract?
Before committing to the purchase, the following should be confirmed:
• the buyer’s tax residence;
• the intended use of the property;
• the amount of IMT;
• the intention to move residence to Portugal;
• the possibility of letting the property;
• the deadlines for benefiting from the exception;
• the need to submit an application to the Tax Authority.
This analysis helps avoid unexpected costs and correctly determine the amount needed to complete the purchase.
How can URB Law Services help?
URB Law Services, with an office in Almancil, assists Portuguese and foreign buyers with property purchases throughout the Algarve.
Our team can help with:
• analysing the applicable IMT;
• checking the buyer’s tax residence;
• reviewing the promissory contract;
• legal due diligence on the property;
• assistance with the deed;
• preparing the application to annul or refund the IMT difference;
• representation before the Tax Authority.
Frequently asked questions
What is the IMT rate for a non-resident buyer?
As a rule, the rate is 7.5% when the property is intended exclusively for housing.
Can I recover part of the IMT if I become resident in Portugal?
Yes, provided you become tax resident within two years and submit the application within the legal deadline.
Can I benefit from the general rates if I let the property?
Yes, if the property is allocated to residential letting at a moderate rent and the required deadlines and minimum periods are met.
Is the refund automatic?
No. An application must be submitted to the Tax Authority.
Contact us to find out more.
