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What are the Tax Benefits for Foreigners Buying Property in Portugal?

Posted by stonepinecompany on January 27, 2025
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Taxes benefits in Portugal

As of 2025, Portugal continues to offer several tax benefits for foreigners buying property, making it an attractive destination for international real estate investors. Here are the key tax advantages:

Non-Habitual Resident (NHR) Regime

The NHR regime remains one of the most appealing tax benefits for foreigners:

  • 10-year tax exemption on foreign-sourced income
  • 20% flat rate on income from work performed in Portugal
  • Particularly attractive for retirees and qualified professionals

Property Transfer Tax (IMT) Exemptions

Certain property purchases may qualify for IMT exemptions or reductions:

  • Investments in urban rehabilitation zones
  • Properties for resale by real estate companies
  • Tourism complexes with attributed tourism utility
  • Real estate for residential letting by investment funds

Capital Gains Tax Benefits

  • Residents pay capital gains tax on only 50% of the gain from property sales
  • Non-residents are taxed at a flat rate of 28% on the full capital gain
  • Tax exemption possible if reinvesting the full sale price into a new primary residence within specified timeframes

Additional Tax Considerations

  • No gift or inheritance tax in Portugal
  • Stamp duty of 0.8% applies to property transactions
  • Married couples can combine allowances for a tax exemption of up to €1.2 million before attracting Additional Property Tax (AIMI)

Urban Rehabilitation Incentives

Investments in properties located in urban rehabilitation areas or buildings over 30 years old may qualify for tax deductions.

These tax benefits make Portugal an attractive option for foreigners looking to invest in property, offering potential for both lifestyle improvements and financial advantages. However, it’s crucial to consult with a tax expert to fully understand and maximize these benefits based on individual circumstances.

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