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Property Tax in Portugal

01 set 2017
Property Tax in Portugal
Informação
The rates of property tax in Portugal vary depending on value and type of property purchased and whether it is to be your main residence or second home. Below are the current rates of property tax in Portugal. These scales apply only to purchases on the mainland. Different tax rates apply in Madeira and the Azores
 
IMT Scales(Mainland Portugal) 
Please note these scales may be subject to change
 
Main Residence
 
 
Value of Property Transaction % Tax Payable Amount to Deduct
Up to €92,407.00 0% 0
From €92,407.00 to €126,403.00 2% €1,848.14
From €126,403.00 to €172,348.00 5% €5,640.23
From €172,348.00 to €287,213.00 7% €9,087.19
From €287,213.00 to €574,323.00 8% €11,959.32
Over €574,323.00 6% 0



Second Home
 

Value of Property Transaction % Tax Payable Amount to Deduct
Up to €92,407.00 0% 0
From €92,407.00 to €126,403.00 2% €924.07
From €126,403.00 to €172,348.00 5% €4,716.16
From €172,348.00 to €287,213.00 7% €8,163.12
From €287,213.00 to €550,836.00 8% €11,035.25
Over €550,836.00 6% 0


 

Value of Property Transaction % Tax Payable
Rustic and Agricultural Plots 5%
Other Property and Urban Plots 6.5%
Offshore in Blacklisted Jurisdictions 10%

 

Other Portugal Property Taxes and Financial Matters
 
Stamp Duty and Registrations
When buying a property in Portugal there is also Imposto de Selo (Stamp Duty) on deeds, mortgages and loans to be paid which ranges from 0.4%-0.8% of the purchase cost depending on the type of transaction and the property value. Your laywer will register the property in your name.
 
Power of Attorney (Procuração) 
Many buyers tend to leave their lawyer a signed Power of Attorney with specific powers to sign the Promissory Contract, utility contracts and complete on their behalf. This is easily done again in a Notary's office and takes on average half an hour and currently shouldn't cost more than 50 to 75 euros. This is recommended if you don't have the time to come over regularly to sign and deal with the bureaucratic part of the process. 
 
Inheritance Tax and Wills Inheritance Tax (IH) was abolished in 2004 for spouses, children, grandchildren, parents and grandparents. All other beneficiaries are subject to 10%(IH). Non residents are advised to make a Portuguese Will to make it easier to dispose of your Portuguese property. 
 
Capital Gains
Portuguese tax residents receive a 50% exemption before the capital gain is added to the normal income tax scales. To calculate the capital gain tax due, you can deduct all buying and selling costs and any capital improvements on the property in the last 5 years prior to the sale. Non tax residents selling a property in Portugal currently get charged 25% flat rate of capital gains.
Exceptions to Capital Gains You may be exempt from capital gains: 
If the property belonged to you prior to 1st January 1989
If you are a tax resident in Portugal and selling your main residence and investing in another main residence in Portugal, as long as the reinvestment is made either less than 2 years prior to the sale or within 3 years subsequent to the sale of the property.
If you are a tax resident in Portugal and sell your main residence in Portugal and reinvest in another main residence within the EU or EEA (as long as there is an exchange of information clause with Portugal regarding tax matters).
 
Corporate Ownership
Corporate ownership can have substantial advantages over direct private ownership if well thought through. Not least in terms of benefiting from stamp duty exemption and reduced capital gains. There are several structures to choose from including offshore structures in white listed countries. There are also other Portuguese company structures benefiting from reduced tax rates. 
 
Fiscal Representation
Non-resident homeowners are required to appoint a Fiscal Representative to ensure that your tax affairs are kept in order. Usually your lawyer will appoint one on your behalf as you need to pay your IMI charge and submit your tax return at the end of the year (which is compulsory under Portuguese law). this shouldn't cost you more than a few hundred euros.
 
Rental Licenses
Many property owners choose to generate extra income from their property by renting it out to holiday makers. If you would like to do so then you must apply for a rental licence (Licença de Alojamento Local or Licença de Utilização Turística) and your property must meet the minimum safety standards set out in the legislation. 
 
Tax on Property Rental Income
Non-residents generating income from property pay a 15% flat rate income tax and you must declare it in your annual income tax declaration (IRS form).
 
Bank Accounts
It is recommended that you open a Portuguese bank account to pay bills, taxes etc.
Again your lawyer should be able to help you with this. Documents usually required for EU citizens are: passport/or identity card, residency card (if applicable), tax number and card (fiscal number) and a proof of residence such as a utility bill or driving licence and for non-EU citizens: a passport and another valid document proving identity with a colour photo, proof of home address in country of origin, tax card (fiscal number) and proof of profession/contract of employment and company details. 
 
Annual Costs
IMI This is similar to Council Tax and is based on the rateable value of your property not the real value. The rateable value for urban property is lower than the real market value and is based on a percentage scale ranging from 0.3% to 0.8% depending on the age of the property and the Municipal Council Area your property's in, size, level of luxury and a few other factors. For properties with a rateable value of over €1,000,000 the rate is 1%. Property in offshore blacklisted jurisdictions pay a 7.5% flat rate.
 
Condominium Charges
If your property is in a gated complex, genertally there is a yearly condominium charge for the upkeep of green areas, pool, repairs etc. 
 
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