Sitemap: Personal financial planning > Expat tax > Property tax in Portugal
This page will discuss property tax in Portugal. The topics covered include:
- Acquisition Costs and Property Tax in Portugal
- Immovable Property Tax
- Property Purchase Tax
- Stamp Duty
- Rental Tax
- Wealth Tax
- Tax Deductions
- Capital Gains Tax
- Inheritance Tax
If you want to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or use WhatsApp (+44-7393-450-837).
This isn’t formal tax, legal or financial advice, and is only written here for informational purposes.
Property investments need to consider taxes for an effective financial planning. When doing so, seeking expert guidance or advice is recommended.
Acquisition Costs and Property Tax in Portugal
Immovable Property Tax (IMI)
This annual property tax in Portugal, calculated as a percentage of the property’s value, contributes to maintaining public infrastructure.
Rates vary between 0.3% and 0.8%, determined by the municipality and the property’s revaluation date.
Permanent residents who own the property as their primary residence can benefit from a three-year exemption.
Additionally, properties with a tax registration value below €125,000 and owned by individuals earning less than €153,300 annually may qualify for permanent exemption.
Property Purchase Tax (IMT)
This type of property tax in Portugal is levied on property purchases and depends on the type, location, and intended use of the property.
The IMT ranges from 0% to 8%, with exemptions available for properties valued below €92,407 (mainland) or €115,509 (autonomous regions).
Other exemptions cover specific situations like urban rehabilitation projects and real estate investments in tourism development.
Calculation of Property Tax in Portugal for Purchase
When calculating Portugal tax rates for IMT, identifying the following aspects is crucial.
- Property type (urban or rural)
- Determining the location (mainland Portugal or autonomous regions)
- Establishing the purpose (primary or secondary residence)
Consider a primary residence purchase in mainland Portugal for €200,000. The marginal rate for this value is 5%.
However, the minimum rate of 0% might apply if the property lies in an exempt region.
Stamp Duty (IS)
This Portugal property tax applies to property transactions, including deeds, contracts, mortgages, and bank loans. The Portugal tax rate for IS ranges from 0.4% to 0.8%, depending on the type of document.
Examples: You’ll pay a 0.8% stamp duty when signing the deed of sale and a varying rate (0.5% or 0.6%) based on the mortgage repayment period.
Rental Tax
If you rent out your property, a 15% flat tax is applied to the net rental income and withheld at the source.
Wealth Tax (AIMI)
Introduced in 2017, this tax applies to owners with a share in Portuguese property exceeding €600,000.
Rates for this indirect property tax Portugal range from 0.4% to 1%, based on the ownership structure and property value.
Tax Deductions
A €600,000 allowance per individual applies to the total value of all Portuguese properties.
For example, a couple owning a property jointly will face AIMI only if the combined value exceeds €1.2 million.
Capital Gains Tax
The capital gains taxes in Portugal apply to profits made from selling assets, including real estate.
The application of these Portugal taxes varies depending on your residency status, the ownership structure, and whether the property was your primary residence.
Expat taxes on capital gains are applicable at a flat rate of 28% on the entire gain from the sale.
Residents are subject to progressive income tax rates ranging from 14.5% to 48% on the gains, added to their other annual income.
CGT Exemptions
Selling your primary residence in Portugal to reinvest in another one within the country within a three-year window (two years before the sale).
Owning the property before January 1989.
Reinvesting the sale proceeds into another primary residence within the EU.
Inheritance Tax
While immediate family members have been exempt from inheritance tax since 2004, a stamp duty of 0.8% applies.
Non-immediate family members face a 10% stamp duty.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.
