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Learn 2026 rules for inheritance tax on property in Lagos, Algarve, including exemptions, Stamp Duty and reporting requirements.

By LiveAlgarve on 16th January 2026 - 4 m. reading time

Last updated in January 2026 (Portugal tax rules can change; always confirm with a qualified solicitor or tax adviser for your specific case).

If you own property in Lagos, Algarve (or you’re buying with long-term family planning in mind), the good news is that Portugal does not charge a “traditional” inheritance tax like many other countries. Instead, inheritance and gifts can fall under Portuguese Stamp Duty (Imposto do Selo) on gratuitous transfers (transmissões gratuitas).

This guide explains what is exempt in 2026, when tax may still apply and the key compliance steps property owners should know.

1) Does Portugal have an inheritance tax?

Portugal abolished its former inheritance and gift tax model and today Stamp Duty (Imposto do Selo) is the relevant tax for inheritances and gifts in many cases.

In simple terms:

• Most close-family inheritances are exempt
• Non-close-family inheritances may be taxed

2) The key exemption in 2026 - spouse/partner, children and parents

Under the Stamp Duty Code (Código do Imposto do Selo), spouses or de facto partners (unidos de facto), descendants and ascendants are exempt from Stamp Duty on gratuitous transfers that fall under the relevant table item for gratuitous acquisitions (verba 1.2) (source).

In practice, this typically means no Stamp Duty is due in Portugal when Portuguese assets (including real estate in Lagos) are inherited by:

• a spouse / civil partner (unido de facto)
• children / grandchildren (descendants)
• parents / grandparents (ascendants)

This remains the position as of the sources checked up to the end of 2025 and the consolidated legislation in force.

3) When is Stamp Duty payable on an inheritance?

If the beneficiary is not a spouse/partner, descendant or ascendant, Stamp Duty can apply.

Typical rate: 10%

Guidance aimed at taxpayers and financial institutions continues to describe the inheritance Stamp Duty rate as 10% for non-exempt heirs.

If Portuguese real estate is involved: commonly 10.8%

Portugal’s Stamp Duty “General Table” structure includes:

• verba 1.2 (gratuitous acquisition) at 10%, and
• where applicable, verba 1.1 at 0.8% for property rights over Portuguese real estate.

These can be cumulative, which is why many professional and bank explainers refer to 10.8% in cases involving real estate.

Important accuracy note: the close-family exemption is clearly expressed for verba 1.2. For donations (gifts) of property, Portugal’s tax authority guidance notes that close families can still have 0.8% due on real estate transfers even though they are exempt from the general donation tax component.

Because real-life inheritance/donation scenarios can vary (especially with mixed assets, partial rights, or lifetime planning), your solicitor should confirm whether any verba 1.1 exposure exists in your specific situation.

4) What value is Stamp Duty calculated on for property?

For Portuguese real estate, the taxable value commonly used in Portuguese tax processes is the VPT (Valor Patrimonial Tributário) (the property’s registered tax value), rather than a market appraisal.

This matters in Lagos because market value and VPT can differ significantly, especially in prime areas near the marina, Meia Praia, Praia Dona Ana, or the historic centre.

5) Do heirs need to declare an inheritance even if exempt?

Yes, exemption doesn’t automatically remove reporting obligations.

The Portuguese tax authority’s Stamp Duty “Modelo 1” instructions explicitly state that supporting annexes can be mandatory, including in exempt cases, and taxpayer guidance commonly stresses that inheritances should still be declared even when no tax is due.

In practical terms, families inheriting property in Lagos should expect a process involving:

• identification of the estate assets (including real estate)
• submission of the relevant Stamp Duty declaration (typically via legal representation)
• land registry updates (to reflect the new ownership)

6) Non-residents inheriting property in Lagos

Portuguese Stamp Duty rules apply based on Portuguese law and the asset/event, not your nationality.

So, if you live in the UK, Ireland, the EU or elsewhere:

• you can still benefit from the close-family exemption in Portugal, and
• you may still have a declaration requirement.

Separately, your home country may have its own inheritance/estate tax rules, so cross-border advice is important.

7) Why this matters for real estate buyers in Lagos, Algarve

Many buyers choose property in Lagos for long-term lifestyle and family planning. From an estate-planning perspective, Portugal’s approach can be attractive because:

• close-family heirs often inherit without a Portugal inheritance tax bill
• property can be retained as a family asset (holiday home or rental)
• planning tends to focus more on legal structure and compliance than on large Portuguese inheritance tax exposure

FAQ - Inheritance tax and Lagos property

Is inheritance tax in Portugal really “zero”?

For spouses/partners, descendants and ascendants, Stamp Duty on gratuitous transfers under the relevant provision is exempt in the law, and common taxpayer guidance reflects that as “no inheritance tax.”

What if I leave my Lagos property to my sibling or niece/nephew?

Non-direct heirs may face Stamp Duty (commonly referenced at 10% and often described as 10.8% if real estate is involved).

Do we still need to file paperwork if no tax is due?

Yes, inheritances are commonly still declared via the Stamp Duty process (Modelo 1), even in exempt scenarios.

For any more information or to answer any questions, feel free to reach out to our experienced and helpful team at Live Algarve Realty.