Portugal Real Estate Taxes – Who Pays And When?

It is crucial to understand the costs of buying Alentejo Property in Portugal. These costs include the property’s price, as well as specific taxes, administrative fees, and notary fees.

You should know that property taxes are calculated differently in Portugal.

IMT Tax

The Imposto Municipal Sobre As Transmissoes Onerosas de Imoveis is a property tax that is due when property ownership is transferred.

The IMT must always be paid by the buyer of the property. IMT must also be paid before the final deed of sale. When exchanging property at the notary, you will need to show proof of payment.

The IMT is also calculated using the higher property value. The purchase price and the tax rate attributed to the property may influence how much the property’s value will vary. The rateable value of the property is usually lower than its purchase price.

Remember that the amount of tax you pay will depend on whether your house is being purchased for permanent residence, a second, or another purpose.

Stamp Duty                                

Stamp Duty ( Imposto Celo), is mandatory in certain situations in Portugal. This applies to financial transactions, bank mortgages, and contracts as well as deeds. The rate will vary depending on which operation is being performed.

Stamp duty is charged on property purchases in Portugal at 0.8% of the sold price.

Remember that stamp duty taxes will always be payable by the purchaser. This payment, as well as the IMT tax, must be made before signing the final deed.

Notary and registration fees

You will need to pay registration and notary fees when you purchase a property in Portugal.

The purchase must be registered at the Land Registry Office to complete the deal.

IMI Tax

Your Municipality charges the IMI (Imposto Municipal Sobre Imoveis) which is used to maintain local infrastructures and services.

The municipal tax only applies to homeowners. You will still have to pay this tax even if you rent a property.

The property’s fiscal value will determine the IMI tax. You may have to pay a higher tax or a lower tax depending on your property’s age, size, and location. The tax rate is set annually and can vary between 0.3% to 0.8% of the given value set by the tax department.

AIMI Tax

You will need to pay Adicional Imposto Municipal Sobre Imoveis if you have a property or multiple properties valued at over 600,000. The AIMI, which replaced the 1% tax on luxury properties, was introduced in 2017.

Capital Gains Tax

Capital gains tax will be due when a homeowner sells property in Portugal. This tax is the difference between the purchase price and the selling price. This amount must be adjusted to reflect all costs associated with the property acquisition.

The property transfer tax, notary, and registration fees;

The real estate agent commission;

Improvements to the property made in the past 12 years.

The Capital gains tax rate due varies depending on where you live and your residence status.

This tax may not be due if you sell a primary residence. You can reinvest the money in the acquisition, improvement, or construction of a primary residence in Portugal within the EU (European Economic Area) within 24 months of the closing of the transaction.

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