Taxes & Costs

When purchasing a property in Portugal, you have to pay tax and other expenses to complete the purchase. The amount varies depending on the property.

It is recommend you budget 10% of the purchase price although it is often less than this. When you reserve a property in Portugal you are given an exact breakdown of the costs, thus, enabling you to plan ahead.

 

Below is an overview of these one-off purchase costs:

• Lawyers Fees

Your appointed lawyer can take care of all the legal issues involved in purchasing a property in Portugal. They will look after your interests at all stages of the transaction, making sure that all licenses are in place, necessary searches are completed, prepare documentation needed for both the Contrato de Promessa de Compra e Venda (promissory contract) and the Escritura (Final Deed) so that the contracts are in order to be signed and of course they will clarify any legal questions that you may have during the process. Most lawyers will charge between 1% and 1.5% (+ VAT) on the purchase price

• Imposto do Selo – Stamp Duty

The "Imposto de Selo" (Stamp Duty) is 0.8% from the purchase price. When buying with a mortgage another 0.8% has to be paid over the value of the mortgage.

• IMT - "Imposto Municipal sobre Transmissões" (Municipal Property Transfer Tax)

       
  Value of Property Percentage Applied Deducted Value
  Up to €92,407 0% € 0
  €92,407 to €126,403 2% € 1,848.14
  €126,403 to €172,348 5% € 5,640.23
  €172,348 to €287,213 7% € 9,087.19
  €287,213 to €574,323 8% € 11,959.32
  €574,323 + 6% € 0
       

 

Table Showing the IMT for Private Property Purchases: Primary Residence: Rental or Holiday Home

       
  Value of Property Percentage Applied Deducted Value
  Up to €92,407 0% € 0
  €92,407 to €126,403 2% € 924.07
  €126,403 to €172,348 5% € 4,716.16
  €172,348 to €287,213 7% € 8,163.12
  €287,213 to €550,836 8% € 11,035.25
  €550,836 + 6% € 0
       

 

As an Example Private Property holiday home with a purchase of €300,000

Price of Property = €300,000 x 8% = €24000
Deducted Value = €11035.25
Total to be paid = €34,000 - €11,035.25 = €12,964.75

Additional IMT Rates:

  • Commercial & Building Plots: Pay flat rate of 6.5% IMT.
  • Agricultural & Rustic Lands: Pay flat rate of 5% IMT.
  • Property acquired by a Corporation domiciled in White listed jurisdictions: Pay the same rates of IMT as in the chart above.
  • Property acquired by a Corporation domiciled in Black listed jurisdictions: Pay 15% IMT.
  • The purchase of shares of a White listed Jurisdiction Corporation: Pay NO IMT.
  • The purchase of shares of a Black listed Jurisdiction Corporation: Pay 8% IMT.

• Notary and Registration Fees

These will have to be paid by the purchaser after signing the final deed of conveyance, costs are around €750.
When buying with a mortgage or requesting extra services from the notary these costs will go up.

• Estate Agent / Real Estate Agents fees

The vendor pays the agency involved.
As with any property in the world, there are also annual costs associated with your property here in Portugal

• Annual Costs

All property owners in Portugal have a council tax to pay each year.

• IMI - Imposto Municipal sobre Imóveis (Property council tax)

This tax is paid to the "Câmara Municipal" (Council Town Hall) of the area where the property is located. Each Câmara Municipal has its own rate, and is decided by the municipal assembly. The person or corporation that owns the property on the last day of the respective tax year is liable to pay the IMI Tax.

• The Tax rates range from 0.2% to 0.8%.
• Property in rural areas are be taxed at 0.8%, whereas property in more urban areas will fall in the stated range.
• Property that has been re-valued since 2004 will fall between 0.2 and 0.5%, and property valued before 2004 will be between 0.4 to 0.8%.
• Property owned through a Corporation domiciled in “Black” listed jurisdictions (Tax havens – E.G British Virgin Island, Isle of Man, Gibraltar) will pay a straight 1% Tax of the rateable value.
• Some property cases will be exempt from the Property Tax (IMI) Property which is to be used as a permanent home or to be rented out will be exempt from Property Tax (IMI) for a period of between 3 and 6 years, and will depend upon the patrimonial value of the Property.
• Property up to the Value of €157,500 will be exempt from IMI for 6 years.
• Property ranging in value from €157,701 – €236,250 will be exempt from IMI for 3 years. The rate is calculated based on a percentage of the fiscal value of the property.

Please note: This information is for guidance purposes only and we cannot accept responsibility for any mistakes or misinformation. It is strongly advised by Just Portugal Properties that Legal and Fiscal Consultations at all times are made prior to any transaction as the laws are constantly changing.