Why invest in Portugal property?

Prices have moved fast: INE's House Price Index rose 17.6% in 2025, with 169,812 homes sold for €41.2 billion. Demand is also uneven. Non-residents accounted for 67.1% of overnight stays nationally, but 82.9% in Madeira and 75.3% in the Algarve, so local figures matter more than national averages.

IMT, the municipal transfer tax, is charged on the higher of the contract price and the property's tax value (IMT Code, article 12). For a home that is not the buyer's own permanent residence, this mainland table has applied since 1 January 2026 (Lei n.º 73-A/2025). Up to €633,931, multiply by the rate and subtract the deduction; above that, one rate applies to the whole value.

Madeira and the Azores have higher bands, and an own permanent home has a separate table starting at 0%.

Worked example. A €400,000 mainland holiday let, priced above its tax value: IMT is €400,000 at 8% less €12,699.89, or €19,300.11. Stamp duty at 0.8% is €3,200. Total: €22,500.11, before legal and registration costs.

Stamp duty is 0.8% on the purchase (General Stamp Duty Table, item 1.1), plus 0.6% on a Portuguese loan of five years or more (item 17.1.3).

Holiday letting is regulated as local accommodation (alojamento local). Decreto-Lei n.º 76/2024, in force from 1 November 2024, gave municipalities more control:

• You register by prior notice to the municipality, and the registration document is the only valid title to open to guests.
• The mayor can oppose a registration within 60 days, or 90 days in a containment area.
• Municipalities may adopt their own regulation; those with more than 1,000 registrations must decide within 12 months whether to.
• Containment areas can cap new registrations and bar homes let on residential leases in the previous two years.
• Owners of more than half a building's permilage can oppose local accommodation in a flat for repeated, proven disturbance.

The decree also lifted the 2023 suspension of new registrations. Check the local regulation for the exact address. For the UK rules, see our short-term lets guide.

GOV.UK lists rental income on overseas property as foreign income that UK residents normally pay tax on. You report it, and any gain, in the foreign section of a Self Assessment return.

• A separate business. Overseas and UK property profits and losses are not combined, and losses on one cannot be set against the other (HMRC, PIM4702).
• Relief. Foreign Tax Credit Relief offsets Portuguese tax on the same income or gain, though you may not recover all of it.
• Rates. From 2027 to 2028, property income, including overseas property business profits, is taxed at 22%, 42% and 47% (Finance Act 2026, sections 6 and 7).
• Gains. Capital Gains Tax is 18% or 24% for 2026 to 2027, with a £3,000 annual exempt amount.
• Changes since April 2025. The furnished holiday lettings rules ended, and the remittance basis was replaced by the 4-year foreign income and gains regime for new arrivals.

The UK and Portugal tax convention

A new convention was signed on 15 September 2025 and has been in force since 29 December 2025, with UK effect for Income Tax and Capital Gains Tax from 6 April 2026. Portugal may tax income and gains from Portuguese property (Articles 6 and 13), and the UK credits that tax against UK tax on the same income or gains (Article 21). Read more in UK tax on overseas property.

Start from the Invest abroad hub. Living outside the UK and buying here instead? See overseas investors. For UK developments listed now, see current opportunities, or speak to us.