Taxes payable on wealth
Above all, it should be noted that in Portugal, the concept of property includes the “full ownership” which is based on the full and exclusive right to use, enjoy and dispose of the property.
This law confers a significant competitive advantage to the Portuguese real estate market.
The acquisition of real estate is subject to the municipal tax on financial transactions involving real estate and stamp duty. These taxes must be paid at a Tax Office by the person buying the property before signing the deed of sale of the property..
I – IMT – Municipal Real Estate Transfer Tax
This is a tax that relates to the transfer of property rights over real estate or parts thereof (use and housing, surface rights, usufruct, etc.).
This tax refers to the sales contract value or the value of the real estate property tax, whichever is higher.
This tax results from the application of variable rates, which in the case of buildings exclusively used for housing, may vary between 0% and 6%.
II – Stamp duty
It is a tax that applies to all acts, contracts, documents, titles, shares and other legal situations or processes, including free transfers of real estate. In the case of property acquisition, it is payable on the value of the purchase and sale agreement or on the taxable value of the property, whichever is higher, and results from the application of the rate of 0.8%.
III – IMI – Municipal Property Tax
Value entered in the land register on the settlement date. This register mentions the description of the building, its location, the value of tax assets and the identity of the owners. The registers are updated every year on December 31.
After buying a property if you do not reside in it throughout the year, you can capitalize on your real estate investment by renting seasonally, for example.