If you are considering selling or buying a house in Portugal, know what taxes you will have to pay and how we can help you to navigate through this process as smoothly and quickly as possible.
Knowing what fees and taxes are required beforehand will allow you to be prepared for any additional costs that may be legally required, so that you can manage your investment in Portugal with confidence.
If you are going to sell your Portuguese property, you will have to pay Real Estate Capital Gains Tax (imposto sobre as mais-valias imobiliárias) in Portugal. In some cases, it may be possible to deduct certain expenses from the amount to be paid, such as construction costs, real estate agency commissions, costs with the Energy Certificates and also expenses with the registration and sale deed.
When buying a property in Portugal, in addition to the bank fees associated with mortgages (if applicable), there are only two taxes which are required in Portugal: the Municipal Property Transfer Tax (IMT - Imposto Municipal sobre as Transmissões Onerosas de Imóveis) and the Stamp Duty (IS - Imposto de Selo).
Owners of real estate or land in Portugal have to pay Municipal Property Tax, known as IMI (Imposto Municipal sobre Imóveis). The rate of this tax depends on the property’s location, size and characteristics.
The Tax on Real Estate Capital Gains is calculated on the profit of the sale and some expenses can be deducted, such as certain taxes paid, commissions to real estate agents and also expenses with the valuation of the property. The value also varies depending on whether or not you are a resident in Portugal.
This tax is paid through your personal income tax return.
The IMT - Municipal Property Transfer Tax (Imposto Municipal sobre as Transmissões Onerosas de Imóveis) is paid in a single instalment and is calculated based on the value stated in the deed or on the Tributary Patrimonial Value (VPT) of the property (depending on the higher of these two values).
The IMT rate applied varies according to the property's price, location and the intended purpose. For example, in the case of an urban property destined exclusively for residential and permanent use, rates may range from 0% to 8%.
IMT tax must be paid before the official sale of the property, because during the signing of the deed the notary will require proof of payment.
Together with the IMT tax, you will have to pay Stamp Duty, the rate of which is around 0.8% of the amount determined in the deed.
According to the IMI rules, anyone who owns a property or land on the 31st of December of each year has to pay IMI tax the following year.
IMI tax is paid on the following dates:
To calculate the value of IMI, you have to multiply the IMI rate applicable by the Taxable Asset Value (VPT - Valor Patrimonial Tributario) of your property.
The IMI rate is set annually by the Municipality where your property is located. In urban buildings, the rates vary between 0.3% and 0.45%, and in rustic buildings the rate is 0.8%.
The VPT is determined by the AT - Autoridade Tributária e Aduaneira (Portuguese Tax and Customs Authority) and is based on factors such as the age of the property or construction price per square metre.
Some municipalities may grant families an IMI tax cut, depending on the number of dependents in each household. The so-called 'IMI Familiar’ is a tax benefit decided by each Municipality annually and applied automatically by the AT.
The IMI tax exemptions granted under Portuguese law include:
The Additional Municipal Property Tax (AIMI) is a tax that complements the Municipal Property Tax (IMI).
It is calculated on the asset value of the property and only applies to asset values above 600,000 Euros. The rate is between 0.7 and 1.5%.
This tax is paid by anyone who owns properties on January 1st of each year.
For additional information, please contact us. Sofia Cardoso, our Accounting and Tax specialist at Portugal Accounting, will provide you with professional accounting and tax-related services.
Portugal Accounting counts on several years of experience working with foreign clients and will help you not only transition to a simple life but make the most of the benefits offered by Portugal.
Our team of highly qualified professionals offers experience and specialization in different areas. Contact us to know more about our services or how we can help you maximize your investments in Portugal.
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