What are the main property taxes in Portugal?

Property taxes include IMI, IMT , and stamp duty, each calculated based on different factors related to the property and the transaction.

Are there tax exemptions or benefits for foreign property owners?

Yes, foreign property owners can apply for NHR status, offering significant tax advantages on global income and specific types of income like dividends and rental income.

How is IMI calculated?

IMI is calculated as a percentage of the property’s tax value, with rates varying based on the property's location and type.

Do you pay Annual Property Tax in Portugal?(IMI)

Property owners in Portugal are required to pay an annual tax known as Imposto Municipal Sobre Imóveis (IMI). The rate for urban properties ranges from 0.3% to 0.5% of the property value, while rural properties are taxed up to 0.8% of their value. There are exemptions for properties valued up to €125,000 if the owner's annual income is less than €153,300, and for premises undergoing municipal-funded reconstruction for 3–5 years

How much is Purchase Tax in Portugal ? (IMT)

When buying a property, you will encounter the Municipal tax on real estate transfer (IMT). The IMT rates for primary residences vary based on the property's value, starting at 0% for properties up to €92,407 and going up to 6% for properties over €574,323. Different rates apply for plots of land and agricultural land. Additionally, there are scenarios where buyers can be exempt from IMT, particularly for lower-valued properties intended as primary residences

How much is the tax on Selling Property in Portugal ?(Capital Gains Tax)

When selling a property, capital gains tax is applicable. For residents of Portugal, the tax is levied on only half of the profit from the transaction, whereas non-residents are taxed on the full capital gain. There are exemptions, particularly when selling a primary residence and reinvesting the profits into another property. Retirees and those over 65 may also invest the profit into a pension fund or insurance company to avoid this tax

What is the Estate Tax in Portugal?

Portugal does not have a specific estate tax, but a stamp duty (Imposto do Selo) may apply at a flat rate of 10% on Portuguese assets inherited. Legitimate heirs, such as spouses, children, parents, and grandparents, are exempt from this tax. If you inherit a property, it needs to be registered with the local land registry office, and additional taxes may apply if the deceased had donated the property during their lifetime

Understanding Property Taxes in Portugal: A Guide for 2024

February 1, 2024

Property Tax in Portugal 2024

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Index

Introduction
Property Taxes Overview
Tax Rates and Calculations in detail
Tax Benefits for Foreign Property Owners
FAQ
Conclusion
Resources

1. Introduction to taxation in Portugal

In Portugal, property owners, including foreigners, are subject to various taxes. This guide provides an overview of these taxes for 2024, focusing on their impact on real estate investment.

2. Property Taxes Overview

Property owners in Portugal are subject to several taxes, including IMI (Municipal Property Tax), IMT (Property Transfer Tax), and stamp duty. These taxes apply to both urban and rural properties, making them a significant consideration for property investors.

Purchasing and Selling Real Estate: Tax Considerations

Property purchase tax rates in Portugal depend on the property's location, value, and the buyer's status. The first quarter of 2023 saw average housing costs at €2,481 per square meter. The Municipal Property Transfer Tax (IMT) varies from 0-8%, and Stamp Duty is standard at 0.8%. Urban residential properties attract progressive tax rates, while rural properties have fixed rates. Capital gains tax obligations differ for residents and non-residents, with residents potentially investing gains into pension funds to receive tax benefits.

Taxation for Residents and Non-residents in Portugal

Portugal has a tax system that recognizes both individuals and companies as taxpayers. The tax rate applied to a taxpayer is influenced by their residential status. If one is a resident and earns a global income, they are taxed progressively between 14-48%. Non-residents, on the other hand, are taxed at a flat rate of 25% on income earned within Portugal.

To qualify as a Portuguese tax resident, one must live in Portugal for more than 183 days in a given year. However, this status is not automatic, and one must apply and register their address with the local tax authority. It is important to note that even short-term residents in Portugal, who stay for less than 183 days, are liable for tax on rental or property income.

If you're considering becoming a resident of Portugal, the D7 visa offers a pathway for those with steady passive income. Applicants must demonstrate an annual passive income of at least €9,120, a figure that adjusts with additional family members. Upon establishing tax residency, you may qualify for the Non-Habitual Resident (NHR) status, affording reduced tax obligations.

It's pertinent to note changes to the NHR regime effective from January 1, 2024. The original NHR program, providing significant tax advantages for new residents, will conclude at the end of 2023. A new iteration, focusing on specific professional domains, particularly in scientific research and innovation, will take its place. Eligibility for the revamped NHR includes transitional provisions for those meeting specific criteria by the end of 2023.

The D7 visa criteria and NHR status encapsulate Portugal's commitment to attracting individuals through beneficial tax measures, albeit with adjustments to cater to evolving economic and professional landscapes. For the most current advice tailored to individual circumstances, consulting with experts in Portuguese immigration and tax law is advisable.

In Portugal, the fiscal year starts on January 1st and ends on December 31st. Tax filings are due between April 1st and June 30th of the subsequent year.

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3. Property Taxes in Detail

The rates for IMT range from 0% up to €97,064, with a maximum of 7.5% for properties valued over €1,050,400. The Annual Municipal Property Tax (IMI) varies from 0.3-0.8%, with exceptions for low-valued properties and those undergoing rehabilitation. Wealth tax is imposed on higher-value properties, with rates ranging from 0.7% to 1.5%.

Rental Income Tax Framework

The taxation on rental income for residents in Portugal varies based on their income. It ranges from 14.5% up to €7,091 to a maximum of 48% for those earning above €80,640. Non-residents are subject to a flat rate of 25%. In 2023, rental yield from residential real estate in Portugal increased by 1%, particularly in cities like Santarém and Coimbra, which had higher profitability.

4. Tax Benefits for Foreign Property Owners

Foreign property owners can benefit from the Non-Habitual Resident (NHR) status, which offers tax advantages on global income for a period of 10 years. This status is particularly beneficial for retirees or those with passive income.

Foreign nationals who own property in Portugal are required to obtain a Tax Identification Number (NIF). This can only be done through a representative. It's important to note that owning property or renting it for a long-term doesn't automatically qualify an individual for tax residency. Tax residency is determined by physical presence or significant ties to Portugal.

If you are a non-habitual resident, you may be eligible for certain tax benefits. For instance, you can benefit from a flat tax rate on certain professional income and be exempted from double taxation on foreign income.

Maintenance Costs and Additional Expenses

Average monthly utilities cost between €80 and €180. Additional expenses include internet, television, and telephone at an average of €40, and amenities such as cleaning and security. Insurance costs range from €180 to €380.

Summary of Portuguese Property Taxes

It's important to note that all property owners, regardless of their nationality, are required to pay taxes in Portugal. If you're interested in acquiring real estate, it could lead to residency possibilities such as the D7 visa. However, please keep in mind that real estate transactions come with additional costs such as IMT and stamp duty, and rental income is also taxable. It's worth noting that there are also taxes on wealth, inheritance, and gifts - the latter two requiring an additional stamp duty. On the bright side, Non-Habitual Residents can benefit from favorable tax conditions.

What are the main property taxes in Portugal?

Property taxes include IMI, IMT, and stamp duty, each calculated based on different factors related to the property and the transaction.
Are there tax exemptions or benefits for foreign property owners?

Yes, foreign property owners can apply for NHR status, offering significant tax advantages on global income and specific types of income like dividends and rental income.
How is IMI calculated?

IMI is calculated as a percentage of the property’s tax value, with rates varying based on the property's location and type.
Do you pay Annual Property Tax in Portugal?(IMI)

Property owners in Portugal are required to pay an annual tax known as Imposto Municipal Sobre Imóveis (IMI). The rate for urban properties ranges from 0.3% to 0.5% of the property value, while rural properties are taxed up to 0.8% of their value. There are exemptions for properties valued up to €125,000 if the owner's annual income is less than €153,300, and for premises undergoing municipal-funded reconstruction for 3–5 years
How much is Purchase Tax in Portugal ? (IMT)

When buying a property, you will encounter the Municipal tax on real estate transfer (IMT). The IMT rates for primary residences vary based on the property's value, starting at 0% for properties up to €92,407 and going up to 6% for properties over €574,323. Different rates apply for plots of land and agricultural land. Additionally, there are scenarios where buyers can be exempt from IMT, particularly for lower-valued properties intended as primary residences
How much is the tax on Selling Property in Portugal ?(Capital Gains Tax)

When selling a property, capital gains tax is applicable. For residents of Portugal, the tax is levied on only half of the profit from the transaction, whereas non-residents are taxed on the full capital gain. There are exemptions, particularly when selling a primary residence and reinvesting the profits into another property. Retirees and those over 65 may also invest the profit into a pension fund or insurance company to avoid this tax
What is the Estate Tax in Portugal?

Portugal does not have a specific estate tax, but a stamp duty (Imposto do Selo) may apply at a flat rate of 10% on Portuguese assets inherited. Legitimate heirs, such as spouses, children, parents, and grandparents, are exempt from this tax. If you inherit a property, it needs to be registered with the local land registry office, and additional taxes may apply if the deceased had donated the property during their lifetime

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6. Conclusion

Understanding property taxes in Portugal is crucial for anyone considering real estate investment in the country. With varying rates and potential benefits like the NHR status, it's advisable to seek professional guidance for tax planning.

7. Resources

For further details on property taxes in Portugal, please refer to the original sources: Imin Portugal.

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