Here is a summary of the taxes applicable to buying, owning, selling or inheriting properties in Portugal
The only significant change to property taxation in Portugal is the creation of a new tax, the AIMI (known as an additional IMI)
and the termination of the IS tax which taxed property owners 1% of the VPT (the rateable value) if that figure was EUR 1 million or
more. Further details on the AIMI tax are described towards the end of this article. The VPT, or rateable value of properties, is
the value attributed by the tax authorities to properties for tax purposes and is the base used to calculate property taxes or in certain
cases to determine the minimum taxes applicable to property transactions. The VPT of properties for habitation and plots of land
for construction is updated every three years based on factors corresponding to 75% of the currency devaluation coefficients fixed
annually by the government. For income tax purposes this can also be revalued at the request of the property owner within
three years of the last revaluation. This is an opportunity to rectify any mistakes found.
IMT Property Purchase Tax
Paid on the acquisition of a property, this tax is payable by the purchaser prior to completion of the transaction. On properties
for habitation the rate varies according to the purchase price of the property and can go up to 6%. On rustic land (non-urban) the
rate applicable is 5% and on plots of land for building or other types of properties the applicable rate is 6.5%. The minimum amount
on which the IMT can be paid is the VPT even if the sales price is lower.
Stamp duty, notary and registration fees.
These have to be paid by the purchaser prior to signing the notarial deed and the registration of the property into the buyer's
name. The stamp duty on the purchase is 0.8% of the sales price. The minimum amount on which the stamp duty can be paid is the
VPT even if the sales price is lower. Notary and registration fees will usually not exceed EUR 1,000.
IMI Annual Property Tax
Payable yearly in arrears in two or three installments depending on the value. This tax is based on the VPT and can vary between
0.3% and 0.45%. Within this limit the rate is fixed annually by the council of the area where the property is located. In the Council of Loul. the rate applicable for 2017 is 0.30% down from 0.38%. The IMI for rustic (non-urban) properties remains at 0.8%.
New AIMI – Additional Municipal Property Tax
The AIMI does not apply to all types of property as the law excludes Non-Urban (Rustic) Properties and Properties registered as commercial, industrial or service providing. Therefore the AIMI will apply to the remaining properties, which include apartments, houses and plots for construction amongst others. .
To calculate the AIMI, we use the combined total value of the VPT of all properties owned (except the properties excluded from AIMI) and apply the following rates to the sum of VPTs obtained:
0.4% on the total amount
Privately Owned Property:
Up to the Value of EUR 600,000 -- No AIMI
Between EUR 600,000 and EUR 1Million -- 0.7% on the value between EUR 600,00 and EUR 1Million
Valued above EUR 1 Million -- 0.7% on 400,000 + 1% on Value in excess of EUR 1Million
A company owned property with a VPT of EUR 2 million used to pay 1% IS on the total amount of VPT (i.e EUR 20,000 per year)
With the new AIMI tax, this property owner will now pay a total of EUR 8,000 annually.
An individual who owns three properties not excluded from AIMI the total VPT of EUR 580,000 now has no AIMI to pay.
An individual who owns two properties not excluded from AIMI with the total VPT of EUR 900,000 will pay the following AIMI:
AIMI = (EUR 900,000 - EUR 600,000) x 0.7% = EUR 1,200
An individual who owns two properties not excluded from AIMI with th total VPT o EUR 1.2Million will pay the following AIMI:
EUR 400,00 x 0.7% = EUR 2,800
EUR 200,000 x 1% = EUR 2,000
Total AIMI to pay is EUR 4,800
Properties owned by companies registered in blacklisted territories remain the same.
The rate applicable remains 7.5% both for IMI and AIMI.
IS Stamp Tax
This tax has now been discontinued. It was applicable to residential properties and plots of land for building with a rateable value of
over EUR 1 million.
Capital Gains Tax
On the sale of a property there is currently a capital gains tax to pay at a rate of 28% for non-resident individuals and 25% for companies (non-residents). This tax is calculated on the difference between the sales price and either the purchase or construction price of the property, if applicable, index linked or its first rateable value index linked whichever is the highest. It is important when building a property to make sure that you receive proper invoices from the builders of the amounts paid so that you have the possibility to offset these costs against capital gains tax payable when the property is sold. There are other costs that you can use to offset against this tax such as invoices of certain refurbishments made to the property in the past 12 years, taxes, notary and registration fees paid at the time of acquisition of the property, and the real estate agent fee. If the property you are selling is your main residence and if you reinvest the proceeds of the sale within 36 months in the acquisition, construction or refurbishment of another property designated as your main residence, within the EU territory or in a territory belonging to the European economic area with whom Portugal has agreements for the exchange of information in tax matters, you can avoid the payment of this capital gains tax.
Between close relatives there is no inheritance tax in Portugal i.e. parents/ children and spouses. Although on gifts you have to calculate a 0.8% stamp duty based on the VPT. Any other situations of inheritance or gift will be subject to stamp duty at a rate of 10% of the VPT.