BUYING A PROPERTY IN PORTUGAL
You don’t need to be a Portuguese resident or have a residence permit to buy a property in Portugal.
However, even as a non-resident, you will need to obtain a Portuguese tax identification number (“NIF”) and, if you are not an EU resident, you will need to appoint a tax representative if you buy/possess property in Portugal.
However, even as a non-resident, you will need to obtain a Portuguese tax identification number (“NIF”) and, if you are not an EU resident, you will need to appoint a tax representative if you buy/possess property in Portugal.
When you buy a property in Portugal, you will be subject to the following taxes:
- Real Estate Transfer Tax (IMT) - up to 7.5% depending on the type of property: primary or secondary residence, building land, commercial property or rustic land. This tax is calculated on the sale price of the property or on the value declared to the Serviço das Finanças (VPT = Valor Patrimonial Tributário), whichever is higher. See the various value tables in the Portuguese version.
- Tax on Documented Legal Acts (IS) - a rate of 0.8% is applied to the same value used to value the LMI.
- Notary and registration fees must also be taken into account, which should be between €750 and €1,500.
Exemptions and reductions :
- Acquisition of buildings for resale by property companies;
- Acquisition of urban buildings for urban regeneration purposes;
- Restructuring operations or cooperation agreements;
- Acquisition of buildings classified as being of national/public/municipal interest;
- Acquisition of buildings constituting a relevant investment, under the Investment Support Tax Scheme (RFAI).
*Source: https://www.pwc.pt/pt/pwcinforfisco/guia-fiscal/2023/imt.html
Updated on 15 June 2023
IMT, IS and notary/registration fees must be paid when the deed of acquisition is signed with the notary.
IMT, IS and notary/registration fees must be paid when the deed of acquisition is signed with the notary.
At the time of acquisition, owners of Portuguese property are required to pay the following taxes annually:
- Municipal property tax (IMI) - between 0.30% and 0.45% on the taxable value of an urban property (different rates apply to rural properties). This tax is calculated by the tax authorities on the basis of certain criteria laid down by law (including surface area, location and any comfort features).
- A special compound rate of 7.5% applies to properties owned by offshore companies resident in blacklisted jurisdictions.
- IMI is paid in a maximum of 3 installments (in May, August and November) by property owners as at 31 December of the respective year.
There is an aggravation for those with vacant homes or in local housing in areas where it is difficult to find accommodation.
You can find the changes to IMT and IMI in Articles 247.º and 248.º, respectively, of the 2023 State Budget.
Exemptions from IMI :
The law provides for several situations in which temporary/permanent exemption from IMI is applicable. Consult us to find out in which cases.
AIMI
In addition to municipal property tax (AIMI) – AIMI is levied on the sum of the taxable values of property owned by a taxpayer on 1 January each year. The applicable rate differs according to the nature of the owner and is levied on the total taxable amount of urban properties located on national territory as follows:
- Individuals or joint estates: 0.7% for a property portfolio worth between €600,000 and €1,000,000.
- 1% for a property portfolio worth between €1,000,000 and €2,000,000.
- 1.5% for a property portfolio worth more than €2,000,000.
- In the case of individual ownership or joint inheritance, a deduction of 600,000 is allowed on the tax base.
- Married couples or cohabiting couples who choose to file a joint return are entitled to deduct up to €1,200,000 from the VPT of all their urban holdings. In this case, the 1% rate will only apply to the amount of the taxable base that exceeds €2,000,000.
- 7.5% for real estate (rural or urban) owned by a company located in a blacklisted jurisdiction.
- Properties classified as "service", "commercial" or "industrial" are not subject to AIMI.
- AIMI is paid in a single installment in September
Property sales
Capital gains tax
The rules of the IRS code changed at the beginning of 2023 for non-residents of Portugal who have obtained capital gains from the sale of property, following the “harmonisation of procedures”.
From now on, anyone who receives capital gains on the sale of real estate will see this amount taxed at 50% of the total, with the amount in question being included in the remaining income and subject to the general rates of the IRS tiers. This is the rule for both resident and non-resident citizens in Portugal. But this was not always the case.
Previously, specific rules applied to non-resident citizens: capital gains on property were taxed in full and at an autonomous rate of 28%. This difference in taxation generated a series of complaints to the courts, in which the tax authorities were accused of discrimination, even leading the Supreme Court of Justice of the European Union to uphold the rights of the injured parties. Thus, for cases prior to 2023, capital gains on property will be taxed at 50% (rather than 100% as in the past) and will continue to be subject to the autonomous rate of 28%.
From now on, anyone who receives capital gains on the sale of real estate will see this amount taxed at 50% of the total, with the amount in question being included in the remaining income and subject to the general rates of the IRS tiers. This is the rule for both resident and non-resident citizens in Portugal. But this was not always the case.
Previously, specific rules applied to non-resident citizens: capital gains on property were taxed in full and at an autonomous rate of 28%. This difference in taxation generated a series of complaints to the courts, in which the tax authorities were accused of discrimination, even leading the Supreme Court of Justice of the European Union to uphold the rights of the injured parties. Thus, for cases prior to 2023, capital gains on property will be taxed at 50% (rather than 100% as in the past) and will continue to be subject to the autonomous rate of 28%.
Exceptions to capital gains tax:
According to the IRS Code, the following cases are exempt from capital gains tax:
- The property sold is the owner's permanent home and the capital gains (the sale value less the amortization of any loan taken out to acquire the property) are reinvested in full in the purchase, construction or renovation of another home that will become your permanent home. Provided that this is done in the 24 months preceding or 36 months following the sale of the house;
- Retired contributors or contributors aged over 65 who invest the capital gains in an insurance contract, in an open pension fund providing a regular periodic income or in the public capitalisation scheme (retirement certificates), within six months of the sale of the property;
- Property acquired before 1989.
Mortgage
Obtaining a mortgage in Portugal:
What’s important is to ensure that your data is analyzed thoughtfully and, if possible, to start with a range of options with the aim of a proposal that may suit you.
After a personalized study of your personal and financial data, we’ll be able to advise you on loan eligibility and affordability.
Some banks have a life insurance obligation, others may have more competitive rates but a cap on the loan amount, while others may not offer fixed-rate products.
An important aspect that many customers are unaware of is the different ways in which a bank will examine your financial capacity in relation to the loan amount. Some banks will emphasize certain types of income stream more strongly than others, while some banks may not consider rental income, for example… In short, some profiles may be more suited to certain banks than others.
After a personalized study of your personal and financial data, we’ll be able to advise you on loan eligibility and affordability.
Some banks have a life insurance obligation, others may have more competitive rates but a cap on the loan amount, while others may not offer fixed-rate products.
An important aspect that many customers are unaware of is the different ways in which a bank will examine your financial capacity in relation to the loan amount. Some banks will emphasize certain types of income stream more strongly than others, while some banks may not consider rental income, for example… In short, some profiles may be more suited to certain banks than others.
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