The biggest tax on an Algarve purchase is IMT, and in 2026 its rate depends on the price and on whether the home will be your own permanent residence or a second home. Stamp duty is also due at purchase, and IMI is charged every year after you own the property.
The short answer
When you buy a home in the Algarve you pay two transfer taxes at completion: IMT (Imposto Municipal sobre as Transmissões Onerosas de Imóveis) and stamp duty (Imposto do Selo). After that, you pay IMI (Imposto Municipal sobre Imóveis), an annual property tax. All three are set and published by the Portuguese Tax Authority (Autoridade Tributária e Aduaneira) on the Portal das Finanças.
IMT is the one that moves your budget most. For 2026 it runs from 0% to 7.5%, depending on the taxable value and on how the home will be used. A second home or holiday home pays more than the same property bought as your own permanent residence, especially at lower prices.
IMT in 2026: which table applies to you
The IMT code (CIMT, article 17) has separate rate tables. The deciding question is whether the dwelling is intended exclusively for your own permanent residence (habitação própria e permanente). If it is not — a second home, a holiday home, or a home bought to let — the higher residential table applies. The bracket limits below were set by Lei n.º 73-A/2025 of 30 December.
Second homes and other residential purchases
- Up to €106,346: 1%
- Over €106,346 to €145,470: 2% marginal
- Over €145,470 to €198,347: 5% marginal
- Over €198,347 to €330,539: 7% marginal
- Over €330,539 to €633,931: 8% marginal
- Over €633,931 to €1,150,853: 6% flat rate on the whole value
- Over €1,150,853: 7.5% flat rate on the whole value
Your own permanent residence
- Up to €106,346: 0%
- Over €106,346 to €145,470: 2% marginal
- Over €145,470 to €198,347: 5% marginal
- Over €198,347 to €330,539: 7% marginal
- Over €330,539 to €660,982: 8% marginal
- Over €660,982 to €1,150,853: 6% flat rate on the whole value
- Over €1,150,853: 7.5% flat rate on the whole value
A separate, lower table applies to certain permanent-residence purchases covered by article 9(2) to (5) of the IMT code: 0% up to €330,539, then the same 8%, 6% and 7.5% bands above that. Whether you qualify is a legal question to settle with your lawyer before you rely on it.
Land and non-residential property
Rustic land (prédios rústicos) pays a single 5% IMT rate. Other urban property that is not a dwelling, and other paid acquisitions, pay 6.5%. This matters if you are buying a plot, a ruin classed as non-residential, or a mixed property.
How IMT is calculated: worked examples
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IMT is not simply the marginal rate times the price. Below the flat-rate bands, the taxable value is split in two. The part up to the top of the highest bracket it fully covers is taxed at that bracket's published average rate; the rest is taxed at the marginal rate of the bracket the price falls into. For the second-home table, the published average rates at the top of each bracket are 1% (€106,346), 1.2689% (€145,470), 2.2636% (€198,347) and 4.1578% (€330,539). For the permanent-residence table they are 0%, 0.5379%, 1.7274% and 3.8361%.
- Second home at €300,000: €198,347 × 2.2636% (about €4,490) plus €101,653 × 7% (about €7,116) = about €11,605 IMT.
- Same €300,000 home as your permanent residence: €198,347 × 1.7274% (about €3,426) plus €101,653 × 7% (about €7,116) = about €10,542 IMT.
- Second home at €500,000: €330,539 × 4.1578% (about €13,743) plus €169,461 × 8% (about €13,557) = about €27,300 IMT.
- Second home at €800,000: flat 6% on the whole value = €48,000 IMT.
- Any residential purchase at €1,500,000: flat 7.5% on the whole value = €112,500 IMT.
Stamp duty at purchase
Stamp duty (Imposto do Selo) is charged on the property transfer in addition to IMT and is paid before the deed. Its rules and rate are published by the Tax Authority on the Portal das Finanças. The sources we rely on for this article do not include the current stamp duty rate, so we do not quote one here; ask your lawyer to include it in your written cost estimate. If you take a mortgage, ask the bank too, as the loan itself can carry its own charges.
IMI: the annual cost of owning
IMI is the recurring property tax you pay each year as owner. It is municipal, so it is not a single national figure; rules and rates are published through the Portal das Finanças. We have no verified 2026 IMI rates for Algarve municipalities in our sources, so budget for it as a yearly line and get the figure for the specific property and concelho from your lawyer or the seller's latest IMI bill.
What current Algarve prices mean for your tax bill
According to INE, the median price at which dwellings actually sold in the Algarve was €3,240 per m² in the 12 months to Q1 2026, up 15.1% from €2,814 a year earlier. New dwellings sold at a median €3,573 per m² and existing dwellings at €3,158 per m². These are recorded sales, not asking prices.
Bank valuations point the same way. INE figures reported by The Portugal News put the median bank valuation of Algarve apartments at €3,010 per m² in July 2026, second only to Greater Lisbon, with overall residential valuations in the region 32.6% above the national median.
In practice, at the INE median a 100 m² home would cost about €324,000. That sits in the 7% marginal IMT band, and as a second home it would pay about €13,285 in IMT on our calculation: €198,347 × 2.2636% (about €4,490) plus €125,653 × 7% (about €8,796). Rising prices push more purchases into the 8% band or the flat-rate bands, so check which band your price lands in before you negotiate.
Budget checklist before you make an offer
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- Decide how the home will be used: permanent residence or second home. It changes the IMT table.
- Place your price in the correct IMT band and calculate IMT using the average-plus-marginal method, or the flat rate above the thresholds.
- Check whether the property is classed as residential, rustic (5%) or other urban (6.5%).
- Ask your lawyer for a written estimate that includes stamp duty and any mortgage-related charges.
- Get the property's current annual IMI figure from the seller or your lawyer.
- Confirm every figure against the Portal das Finanças before the promissory contract.
Working with Homiberia
Homiberia is a family-run Algarve agency licensed under AMI 11961, with 15+ years in the local market, and works with financing partners ComparaJA and Millennium BCP if you need a mortgage. We currently list 65 homes for sale across the Algarve and can help you run the tax numbers on any property before you commit.
- Do non-residents pay a higher IMT rate in the Algarve?
- The IMT tables are split by how the home is used, not by the buyer. A home intended exclusively as your own permanent residence uses the lower table; any other residential purchase, such as a holiday or second home, uses the higher one, which starts at 1% instead of 0%.
- How much IMT do I pay on a €500,000 second home in 2026?
- About €27,300 on our calculation: €330,539 at the 4.1578% average rate plus the remaining €169,461 at 8%. Confirm with your lawyer or the Portal das Finanças simulator.
- When does the flat IMT rate apply?
- For second homes, a flat 6% applies to the whole value above €633,931 and up to €1,150,853. For a permanent residence the 6% flat band starts above €660,982. Above €1,150,853 both tables charge a flat 7.5%.
- What IMT rate applies to buying land?
- Rustic land pays a single IMT rate of 5%. Other urban property that is not a dwelling pays 6.5%.
Sources
- Portal das Finanças: CIMT article 17 — IMT rate tables
- INE: median sale price per m², Algarve (12 months to Q1 2026)
- The Portugal News: Algarve property valuations pass €3,000 per square metre
Property figures from Homiberia's own listings, as of Sep 28, 2026.
