| Answer: Every property in Portugal has a
rateable value, attributed according to a
valuation by the local tax department. This
valuation is used to determine the property
tax (now known as IMI – formerly known
as “contribuição autárquica”). This is
payable every year. Until 2003 the criteria
used to mean this valuation was different in
each local tax department. No general rule
could be applied. From 2003, however, the
Portuguese government has decided to
apply general criteria to the entire country
for the calculation of the rateable value for
each kind of property. This new formula
has brought rateable values much closer to
(although almost always somewhat lower
than) each property’s actual market price.
This rateable value is then used to calculate
the IMI tax (or rates) payable per year.
For example, in Loulé the Council has
established the IMI at 0.72% of the rateable
value. Usually, 50% of the IMI is payable in
April and the balance in September for the
previous year (i.e. in 2007 you would
be paying the 2006 tax). Your fiscal
representative will receive notice of the tax
payment due from the local tax department.
The main criteria involved in the
calculation for the rateable value are:
For calculating the base cost of the property
– the amount per square metre of
construction is fixed by the Portuguese
government for each locality annually.
To achieve the base cost you simply
multiply that figure by the square metres of construction of the villa by 25% of the
figure of the construction per square meter
for the respective council. For example:
imagine that for Loulé the Portuguese
government has fixed a cost of €600 per
square meter of construction and that you
have a villa of 400 square metres of
construction of which 200 square metres
are covered living area. In this case you
multiply €600 x 400 = €240,000.
To this you add €150 (representing 25%
of the per square metre cost of
construction) x 200 = €30,000. The total
sum of €270,000 is the base cost.
To this figure you then apply several
positive or negative coefficients that have
the effect of increasing or decreasing
the base.
In principle, they are as follows:
i) Areas – garden area, private areas,
etc. will be multiplied to the base cost
ii) Property usage coefficient:
If the property is used for commerce it is
multiplied by 1.2; if it is used for services
by 1.1; for habitation 1.0, for industry or
warehousing 0.6; covered parking 0.4.
iii) Location of the property – The
multiplier coefficient would vary from
0.35 (rural areas) to 3 (prime real estate
areas).
iv) Quality and comfort – There are some
comfort and quality criteria that apply.
There is a positive coefficient up to 1.7
for houses that are in private
condominiums, town houses, houses with
a garage, tennis court, swimming pool,
central heating, etc. There is a negative coefficient for certain situations, for
example if the house does not have
kitchen, wc, if there is no public water or
sewerage or electric or gas network, etc.
v) Age of the property – This coefficient
goes from 1 (new properties) to 0.35
(more then 80 years old property).
Just to give you an idea, the first valuations
under the new criteria that I have seen for
villas in Quinta do Lago were around
€1 million.
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