The New 7.5% Transfer Tax for Non-Residents — and How to Buy Safely

On 20 May 2026, Decree-Law 97/2026 was published in Portugal's Official Gazette, part of the "Construir Portugal — Leasing and Simplification" package. Among several measures for the housing sector, the one that most directly affects foreign investors is this: the purchase of residential property by non-tax-residents in Portugal is now subject to a flat 7.5% Property Transfer Tax (IMT), instead of the progressive scale that applies to residents (between 2% and 8%, depending on the property's value).

How it worked before

Before this change, residents and non-residents paid the same progressive IMT scale — for a primary residence, the rate started at 0% up to around €104,261, rising progressively to 7.5% above €1,128,287. This meant most mid-value purchases (between €150,000 and €600,000) paid an effective rate well below 7.5%, often between 3% and 5%.

What changed in practice

For non-residents, that progressivity no longer applies. Regardless of the property's value — whether a €200,000 apartment or a €2 million house — the IMT rate is now always 7.5%. According to the law itself, "no exemption or reduction applies" to this group of buyers, except for the three exceptions detailed in the next section.

1. Becoming a tax resident before the purchase

Anyone who spends more than 183 days in Portugal, consecutive or not, within any 12-month period, is considered a tax resident and falls outside this rate, with the normal progressive scale applying instead.

2. Becoming a tax resident within 2 years of the purchase

If you buy as a non-resident but become a Portuguese tax resident within 2 years of the acquisition date, you can apply to the Tax Authority for a refund of the difference between the 7.5% IMT paid and what would have been due under the normal progressive scale.

3. Long-term rental at moderate rent

If the property is placed on the long-term residential rental market, with monthly rent not exceeding the "moderate rent" ceiling (currently €2,300), within 6 months of the purchase, and kept rented for at least 36 months (consecutive or not) within the first 5 years, the buyer also qualifies for a refund of the difference.

*Legal fees in Portugal for handling a property purchase typically range between 1% and 1.5% of the transaction value, plus VAT, according to industry sources. Not included: notary and land registry costs (typically a few hundred euros, variable by office) or any bank fees if financing is used.

What this means in comparative terms

For the €1,000,000 property, the jump in cost between the previous progressive scale (which would have resulted in IMT close to €65,000 to €67,500 for this value) and the new flat rate of €75,000 is relatively moderate in percentage terms — but for mid-value properties (€200,000 to €500,000), where the previous progressive scale applied effective rates of 3% to 5%, the jump to 7.5% represents a cost increase of 50% to 150% in absolute terms.

Why this matters more than it appears at first glance

This additional cost does not only affect the initial budget — it also reduces the effective net yield of the first year of ownership, and delays the break-even point of the investment, if the goal is medium-term rental return. This is why it is worth modelling this cost from the outset, rather than treating it as a last-minute administrative detail.

Portugal has no title insurance

Unlike the United States or the United Kingdom, Portugal does not have a title insurance system. This means that if an ownership problem arises after the purchase — an uncancelled mortgage, an inheritance dispute, a registration error — there is no insurance policy to cover the loss. Buyer protection depends entirely on verification carried out before signing.

The most important document: the Permanent Certificate

The Permanent Land Registry Certificate, available online at predialonline.pt for around €15, shows the complete ownership history of the property: the current registered owner, all previous transfers, mortgages and liens in force, and any pending disputes. Cross-referencing this with the municipal tax record (Caderneta Predial) allows you to confirm that the area, description and owner match in both documents — discrepancies between the two are a common warning sign, especially in older or already renovated properties.

The profile most targeted by fraud

According to industry analysis, the buyer profile most targeted by fraudulent schemes in Portugal is precisely the foreign investor who buys remotely, is unfamiliar with the Portuguese system, and is in a hurry to close in a high-demand market. The most targeted transactions typically involve renovated apartments presented as "exclusive" or "off-market", in Lisbon, Porto and coastal areas of the Algarve.

The most relevant warning sign, according to industry analysis: pressure to pay a deposit or reservation fee before independently verifying who owns the property through the official land registry. A legitimate seller or intermediary never has a reason to prevent or rush that verification.

Other signs to watch for

• Requests for direct payment to the "owner" without formal documentation, outside the usual lawyer/notary process
• Price significantly below the area's market value, with no clear explanation (genuine urgency to sell is possible, but should be verifiable)
• Refusal or excessive delay in providing the Permanent Certificate or the municipal tax record
• Explicit pressure based on the fact that the buyer is "far away" and cannot easily visit

The simplest and most effective recommendation

Hire a Portuguese real estate lawyer, independent of the seller or intermediary, before signing any Promissory Purchase and Sale Agreement (CPCV) or transferring any funds. The cost (1% to 1.5% of the transaction value, as seen in Section 3) is a small fraction of the risk it mitigates.

The new 7.5% transfer tax does not make Portugal a bad investment destination — it makes it a destination where the cost calculation demands more precision than it did a year ago. And the absence of title insurance does not make Portugal an unsafe market — it makes it a market where document diligence, done correctly, is what separates a smooth purchase from an avoidable problem.

In both cases, the answer is the same: work with people who know the terrain, calculate the exact cost before proceeding, and verify every document before committing capital. It is that combination — not luck — that protects the rational foreign investor.