Portugal Property

Stamp Duty

IMT, a municipal tax, replaced the old SISA system of transfer taxes in Portugal in 2003. Tax is calculated taking into account the cost of the property, its size, intended use, location and age. Evidence of payment of this tax must be presented prior to signing the deed of sale.

Capital Gains Tax

Capital gains are bracketed with income tax in Portugal, without the need for separate rates for capital gains.

Non-residents pay tax at a flat rate of 25%, which is calculated from the difference between the declared purchase and selling prices.

Residents must pay income tax at 50% on the gain and this is stretched over five years. Exemption is however given if your capital gain is from a permanent home or if you have re-invested the money into another property within two financial years from the date of sale.

Inheritance Tax

Inheritance tax is not charged if you receive property from direct members of your family. However, other beneficiaries, including unmarried partners, will be charged between 0 to 50% on their inheritance. Tax rates can vary widely, depending upon the family relationship between all parties and the value of the property.

VAT

17% Value Added Tax (VAT) is charged upon property purchase in Portugal, with lower rates on the Portuguese islands of Madeira and the Azores.

You will need to register for VAT, whether or not you are a tax resident. All real estate related services are subject a standard rate of VAT at 21%.

Tax on Rental Income

Income tax will be charged if you let out your property. Double taxation agreements are in operation to prevent your paying tax in two countries. Tax on Portuguese rental income is calculated on a sliding scale, from with 40% downwards.

Local Taxes

A form of council tax, or IMI (Imposto municipal sobre imóveis, is charged to all property owners and is calculated on the value of your property. IMI can range from 0.2 to 0.5% of the property value for new builds and 0.4 to 0.8% for older properties.