The Portuguese tax authority has issued guidance regarding the implications for taxpayers who convert residential properties into short-term rental accommodations. This clarification arises following an inquiry from a taxpayer who sought binding information about the occasional use of a residential apartment for local accommodations. The taxpayer had purchased the apartment in October 2024 with the intention of residing in it.
At the time of purchase, the Young IMT (Municipal Property Transfer Tax) was in effect, offering full exemption from this tax (and from the Stamp Duty) for properties priced up to 316,772 euros (a limit that was raised to 324,058 euros in 2025) and partial exemption (with an 8% rate) for properties priced above this threshold and up to 633,453 euros (648,022 euros in 2025).
The guidance specifies that if the property owner begins using the apartment for short-term rentals, even sporadically, within six years of acquisition, the IMT applicable to the sale must be paid. The owner will have 30 days to request the tax settlement.
The tax authority clarified that, in such a case, the IMT will be applied at a rate of 6.5%, which is the rate for urban properties not exclusively intended for personal residence or permanent habitation.
The tax authority emphasizes that the benefits of exemptions and reduced rates under the IMT consider the usage made by the buyer, not just the purpose outlined in the property licensing. Therefore, any change in the property’s intended use within six years of acquisition, unless falling within specified exceptions, leads to the expiration of the benefits granted under exemption or rate reduction.
The law allows for certain circumstances where the property’s purpose can change before the six-year term without losing the tax benefit. These include changes in family composition (such as marriage, divorce, or increasing dependents) or relocating more than 100 kilometers from the primary residence.
However, converting the property to a short-term rental does not fall within these exceptions.
Consequently, if a residential unit is initially acquired exclusively for permanent residence and then used even occasionally as a short-term rental, providing temporary lodging services to tourists, it results in a partial reclassification of its use. This change occurs before the expiration of the six-year period and hence nullifies the IMT exemption granted at acquisition.
The tax authority further clarified that the application for the relevant IMT rate for secondary homes, which offers no exemptions and has progressively increasing rates based on property value, does not apply to this scenario.
