Buying property in Portugal from the US or UK in 2026

Portugal rewrote the rules for foreign property buyers in 2026, and most of the yield figures still circulating online predate it. Here is what a US or UK buyer pays to get in, what the property costs to hold, what the rent is taxed at, and what is left, on a real example.

What changed in 2026

• Transfer tax (IMT). Decree-Law 97/2026 of 20 May added, for purchases from 25 May 2026, a flat 7.5% IMT for non-resident buyers of residential property, replacing the progressive scale (which runs from 1% to 8% for a second home and already reaches a flat 7.5% above about €1.15 million). The 7.5% does not apply if you are a Portuguese tax resident at purchase. The difference against the normal table (about €10,700 on a €400,000 second home) is refunded if you become resident within two years, or lease the property at a moderate rent within six months of buying and keep it let for at least 36 months within the first five years; the claim must reach the tax office within six months of becoming resident or of signing the lease. Several law firms expect a challenge under EU free-movement-of-capital rules; keep every receipt.
• Rental income. Residential leases at a rent of up to €2,300 a month are taxed at 10% instead of 25% from 1 January 2026 to 31 December 2029 (EBF article 45-C). The law does not carve out non-residents, but confirm with an accountant who files for non-residents before you build a plan on it.
• Golden Visa. No property route since October 2023. Citizenship by naturalisation now needs ten years of residence (seven for EU and CPLP nationals) for applications after 18 May 2026.
• Short-term rentals. Decree-Law 76/2024 (in force 1 November 2024) repealed most of the 2023 restrictions: registrations are permanent and transferable, the national freeze on apartments ended, the extraordinary CEAL tax was scrapped. Councils decide locally: Lisbon's containment zones (updated 6 December 2025) refuse new registrations where short-term rentals exceed 10% of housing and cancel existing ones on sale; Porto closes five historic parishes; the Algarve has no regional cap, with Lagoa restricting and Faro proposing to. From 20 May 2026 platforms must verify registration numbers and delist invalid ones.

What it costs to buy

So a non-resident should budget about 9 to 10% on top of the price before furniture.

What it costs to hold

• IMI, the annual property tax: 0.3% to 0.45% of the tax value (VPT), set by each council. The VPT is usually well below the market price.
• AIMI, the additional tax on high-value holdings: 0.7% on the part of combined VPT above €600,000 per person (€1.2 million for a couple), 1% above €1 million, 1.5% above €2 million.
• Empty-house penalty. A property with no use for a year (under 7 m³ of water or 35 kWh a year) can be classed as devoluto and its IMI tripled, ten times in pressure zones. See the empty house guide.
• Condominium fees, insurance, management. Long-term management is typically 8% of rent; a short-term rental operator takes 20 to 30% of bookings.

What the rent is taxed at

• Non-residents pay a flat 25% on net rental income (gross rent minus IMI, condominium, insurance, repairs and the like), declared in Portugal every year. The 10% moderate-rent rate above may apply until 2029; see the non-resident rental tax guide.
• Short-term rental income is taxed differently: as business income, in most cases on 35% of gross receipts under the simplified regime, which is why a mediocre holiday let can out-tax a good long lease.
• US owners report the same income on Schedule E and can usually credit the Portuguese income tax on Form 1116; IMI and AIMI are deductible expenses, not credits, while IMT, purchase stamp duty, notary, registration and legal fees go into the property's cost basis rather than the year's expenses (loan charges such as mortgage stamp duty and origination fees are treated separately). A Portuguese bank account is FBAR-reportable above $10,000 combined. UK owners declare it on the foreign pages of the self-assessment return and claim credit for Portuguese tax under the treaty. Get a cross-border accountant; the double declaration is where most owners lose money.

Worked example: €400,000 two-bed apartment, non-resident buyer

The short-term column assumes 60% occupancy on the Algarve coast, a licence that exists, and an operator you check every month. Miss one of the three and the long lease wins. Miss the licence and there is no second column.

How to do it properly, in order

1. NIF (tax number) for each buyer, through a lawyer or a fiscal representative; outside the EU or EEA you need a representative or electronic notifications on the Finanças portal.
2. Bank account in Portugal; the deed money must come from an account in your name.
3. Lawyer engaged before you make an offer. Not the seller's, not the agent's.
4. Licence checks before the promissory contract: habitation licence, energy certificate, land registry, condominium debts, and for short-term rental the council's containment map.
5. Promissory contract with a deposit, usually 10%, and the conditions that protect you (financing, licence, works).
6. Deed at the notary, IMT and stamp duty paid the day before.
7. Lease registered with Finanças within the month, or the short-term rental registration filed, before the first guest or tenant.

Sources: Decree-Law 97/2026 of 20 May (CIMT article 17 n.º 10; EBF article 45-C; RSAA); Law 56/2023 of 6 October (Mais Habitação) and Organic Law 1/2026 of 18 May (nationality); Decree-Law 76/2024 of 23 October (alojamento local); Lisbon municipal containment regulation in force 6 December 2025; Regulation (EU) 2024/1028; Personal Income Tax Code articles 72 and 31; CIMI and AIMI rates for 2026; EBF article 58-A (IFICI). Figures checked October 2026; confirm your case with a lawyer and accountant.