Portugal, a southwestern European country, is an attractive destination for foreign investors and families seeking opportunities to relocate in Europe. The reason is its high-quality lifestyle and ample business opportunities especially in the top cities of Portugal such as Lisbon and Porto. During recent years, the Portugal real estate market has seen exceptional growth. making Portugal the best place for buying a property in the European Union, surpassing major countries such as France and Germany. According to Eurostat, the housing prices in Portugal have surged by 16.3% in the Q1 2025. To make the houses for sale in Portugal affordable for Portuguese residents the government is increasing the Property Transfer Tax (IMT) for non-residents.
What is IMT and How Does It Work?
For those who do not know about IMT. It is a one-time property transfer tax paid by the buyer at the time of transfer of real estate ownership in Portugal. Its percentage can vary depending on the purchase value. The current IMT rate for Portuguese residents is 8%.
Why is Portugal Changing IMT Rules?
According to the Idealista price index, the median cost of houses in Portugal has reached €2,934 per square metre which shows a 7.6% surge in prices in September 2025 compared to the same month in 2024. Moreover, a report says that in 2024 around 12% of total real estate Portugal sale was for non-residents, with 8% average annual growth rate between 2019 and 2024.
According to Essential Business, in 2023 the non-EU buyers spent €405,000 average property price which is more than the price spent by EU buyers €277,000. This strong foreign demand and increasing housing prices has made it difficult for people living in Portugal to buy homes. Hence, the government has developed a strategy of increasing the IMT tax for non-residents to reduce house shortage and making it easier for locals to buy homes.
Details of Proposed Changes by PM Luis Montenegro
After a cabinet meeting in Lisbon, Prime Minister Luis Montenegro said, “The aim is to cool foreign demand without hurting Portugal investors' appeal.” Along side IMT increase, some other measures were also introduced which include:
Speeding up the approval of building permits and increasing construction.
Expanding affordable rental options.
Offering tax relief for younger buyers.
The new tax rates are not announced yet but the experts say that the proposed changes in property tax for buying real estate in Portugal will be much less than that announced in Spain which is 100% real estate tax for foreign buyers.
Conclusion
The government's plan to increase property tax in Portugal for non-residents and to introduce other measures for reducing house shortages shows its efforts to make buying houses for sale in Portugal easier for Portuguese residents. But analysts say that the real challenge here is improving infrastructure, not just adjusting taxes. Even after the tax increase the Portugal real estate market will remain strong because Portugal is a safe country and provides many lifestyle opportunities to people.