Information about the IMT Tax

When purchasing or thinking about buying a property, it is important to know that there are some expenses and taxes related to that purchase.

One of the taxes to be taken into account is the IMT, which is the most expensive tax to pay when purchasing a property, whether it is an house, apartment, land, etc. However, there are different rates to be applied that vary depending on the value of the property, the type of property and the purpose of acquiring the property.

When purchasing or thinking about buying a property, it is important to know that there are some expenses and taxes related to that purchase.

One of the taxes to be taken into account is the IMT, which is the most expensive tax to pay when purchasing a property, whether it is an house, apartment, land, etc. However, there are different rates to be applied that vary depending on the value of the property, the type of property and the purpose of acquiring the property.

When purchasing or thinking about buying a property, it is important to know that there are some expenses and taxes related to that purchase.

One of the taxes to be taken into account is the IMT, which is the most expensive tax to pay when purchasing a property, whether it is an house, apartment, land, etc. However, there are different rates to be applied that vary depending on the value of the property, the type of property and the purpose of acquiring the property.

When purchasing or thinking about buying a property, it is important to know that there are some expenses and taxes related to that purchase.

One of the taxes to be taken into account is the IMT, which is the most expensive tax to pay when purchasing a property, whether it is an house, apartment, land, etc. However, there are different rates to be applied that vary depending on the value of the property, the type of property and the purpose of acquiring the property.

What is IMT, or what does it mean?

The IMT is, or refers to, the Municipal Tax on Real Estate Transfers (“Imposto Municipal sobre Transmissões Onerosas de Imóveis”). It is the tax paid to the State on onerous transfers of property rights, that is, it is the tax paid whenever there is a financial transfer of purchase and sale of a property located in Portugal.

The value of the IMT tax is not the same in all cases, as it varies according to:

•   the acquisition value of the property, or according to the taxable equity value (for the calculation of the IMT, the higher of these two values is considered);

•   the rate to be applied (from 1 to 7.5%);

•   location of the property;

•   its purpose;

In what situations should IMT be paid?

The payment of the Municipal Tax on Onerous Transfers (IMT) occurs in the following situations:

• Purchase and sale of a property;

• Property exchange (the IMT amount payable will only be on the difference between the properties exchanged);

• When there is an early settlement of real estate leasing properties, only the IMT is paid on the outstanding amount.

There may be cases in which the buyer is exempt from paying this tax, such as:

• Property for permanent residence with a deed or tax value (the higher of these two values is considered) less than €121,330.00 (in the autonomous regions of the Azores and Madeira) or less than €97,064.00 (mainland Portugal);

• Buildings for resale*;

• Rustic buildings acquired by Young Farmers;

• Buildings classified, individually, as of national, public or municipal interest;

• Buildings acquired by credit institutions in foreclosure, bankruptcy/insolvency proceedings or in lieu of payment;

* In the case of the possibility of benefiting from IMT Exemption through the acquisition of buildings/Properties for resale, it will be necessary to verify the assumptions below:

– The purchaser is a taxable person registered to carry out the activity of buying and selling real estate (CAE 68100), and who proves the exercise of the activity, since according to the current law, he must have carried out the activity in the last two years;

– The deed states that the property acquired is intended for resale;

– The acquired property must be resold, within a period of three years, without being resold again;

– The property has not been subject to extensive rehabilitation works.

When, and how, to pay the IMT?  
The payment of the Municipal Tax of Onerous Transmissions (IMT) must be made before the deed of purchase and sale of the property is signed. In the purchase and sale of real estate whose processes are accompanied by us, we will be available to inform the client about the most appropriate procedure to proceed with the payment of taxes related to the acquisition of the real estate, including the IMT.

Observations: Although the above information is as correct and informative as possible, we inform you that it should not be considered binding, so it is recommended that you read and/or analyze supporting documents, related to the theme, or subject, addressed.