Property tax in Portugal can be tricky but this article will guide you trough the essentials so you have a better understanding where to start and where can be your potential problem.
residents vs non residents – is there a difference in taxes?
When you buy a property in Portugal you need to pay certain taxes, first when buying but also after buying the property. You will pay the same amount of taxes if you are a resident or if you are non resident in Portugal.
So there is no different in taxation when we are speaking about property tax in Portugal for residents vs. non-residents.
Also keep in mind that paying these taxes in Portugal that are related to your property will not make you a resident here. There are several situations that make you a resident in Portugal, the most common of them being: living in Portugal and earning income in Portugal. But not just owning a house without living in it.
Fun fact: Did you know that in 2021 almost 500 Portuguese houses sold each day?
Your life can look like that! But with taxes.
Taxes WHEN BUYING a property in Portugal
The main cost that you will have to pay is the IMT transfer tax (Imposto Municipal Sobre Transmissões).
The IMT is not fixed and varies depends on your situation, what kind of property are you buying. For example if you are buying as physical person or as a company. And of course the value of the property and if your home is second or third home.
But a a general information this IMT is between 1% and 8% of the purchase price.
The fee of the realtor is paid by the seller so when you buy you don’t pay anything to the realtor.
Fees of the land registry and the notary: you will pay these at the notary and they usually are between 1% to 2 % from the purchase price
The Stamp Duty (imposto de selo): This amout is fixed and it’s 0,8 % from the purchase price
When you take mortgages, you also need to pay stamp duty. If the repayment period is more than five years, the tax on the stamp duty is 0.60%. Yet, if it is less than five years, it is 0.5%.
So in total, they say to be prepared to have around 10% to 20% on top of the actual price of the house.
Taxes AFTER buying a property in Portugal
IMI – Annual municipal tax
This is paid every year and it’s between 0.3 – 0.5% for urban homes and 0.8% for rural property. Each municipality make their own tax within this limits. So it’s totally depends on the value of the house and where the house is located.
This IMI is not applyed to the purchased price of the property is applied of the taxable value. So in your caderneta predial, which is a document that you get after you bought the property, where you see that the property has been inscribed on your name, you see there also the taxable value. So you apply the % to that value.
This is good news!
It’s something that we don’t think about or we don’t want to! But we must!
For imediate family they will pay stam duty of 0.8%. 10% stamp duty is for non-immediate family.
Capital Gains Tax
Also something we don’t consider when we buy a property in Portugal. Capital gains tax applies when you sell your property, and it only applies to gains, the profit you make from that sale.
Portuguese capital gains tax will depend on your residency status, and how you own the asset, and whether it is your main home. So please consult a professional before making any decision on this topic.