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Property Transfer Tax in Portugal (IMT)

Property Transfer Tax in Portugal - IMT

When purchasing property in Portugal you will be requierd to pay certain taxes of which IMT - Property Transfer Tax - is one.

IMT (Imposto Municipal sobre Transmissoes de Imoveis) is payable whenever property (immovable assets) is transferred from the ownership of one person or entity to another. This tax will, therefore, arise even where the transaction is not a straightforward sale for cash. For example:

  1. If any rental agreement is executed which extends beyond 30 years or transfers ownership once a given amount of rental has been paid;
  2. If two properties of differing values are swapped;
  3. If a company, being the owner of property/properties, is acquired or shares in excess of 75% of the total are acquired.

IMT is generally payable by the purchaser of the property, his/her agent or the purchaser of 75% of the shares in a relevant company.  If properties are swapped then it is the owner of the more valuable property AFTER the exchange who is due to pay the IMT due.  The tax is usually paid before the transaction takes effect which means, in most cases, when the contract for sale is signed at the notary's office.

How much is IMT?

IMT is charged on the higher of:

  1. The price outlined in the sale contract; and
  2. The VPT (Valor Patrimonial Tributario) - essentially the rateable value of the property - which is assessed by the Portuguese tax authorities.

It is also important to realise that IMT rates vary depending on the use of the property so holiday residential properties, for example, attract higher tax charges than those used for permanent residence by Portuguese tax residents.  As these rates, value bands and reliefs can change from year to year purchasers are advised to consult a tax professional (or your solicitor) at the time of purchase.  You should budget to pay up to 6% of the purchase price for properties at prices above around €500,000 and between 3% and 5% for lower valued properties.

If the value declared in the purchase contract is particularly low or the authorities have reason to suspect IMT has not been correctly declared or calculated the Portuguese tax authorities have various means of adjusting the tax due or carrying out an investigation.