When buying a house in Portugal, you have to pay an annual tax on your property. The Portuguese property tax – which is called in Portugal: Imposto Municipal sobre Imóveis (IMI) - is a municipal tax. When do you have to pay property tax? Anyone who owns property in Portugal on 31 December of any year is in principle liable to pay IMI for that year. You will always receive the assessment of this municipal tax in April. The IMI assessment you receive in April relates to the previous year. If you receive the notice of assessment in April, the payment deadline expires on 31 May, one month after you receive the invoice (update 2019). However, if the contribution is between EUR 100 and EUR 500, you can also pay this tax in two instalments. The payment deadlines then fall in May and November of the same year. If your contribution is more than 500 euros, you can even pay in three instalments. The payment deadlines are in May, August and November of the same year.
Please note: if you are married under a pre-nuptial agreement and you are both equal owners of the property in Portugal, you will both receive a contribution of 50% of the total amount.
How is the IMI calculated?
The property tax is levied on the "Valor Patromonial" of the property. You can find the "Valor Patrominial" of your Portuguese property on the extract of the tax office, also called "Caderneta Predial".This "Valor Patrominial" is the result of a valuation that takes into account the location, condition, quality, size and year of construction of the property.
A percentage is charged on this "Valor Patrominial" as a municipal tax. Each municipality in Portugal has its own rate for the property tax and municipalities can adjust this per year. The rates for houses vary between 0.3 and 0.5 percent (differs per municipality, see full list of all councils and the applicable 2021 rates here) and the rate for agricultural land is 0.8 percent. If there are homes that were last valued before 2004, a rate applies between 0.4 and 0.8 percent of the registered value at the tax authorities.
How can you pay the tax?
Payment of the IMI can be made in Portugal at the tax office, the post office and at any multi-bank ATM. If you are not in Portugal, you can make the payment via the online platform of the tax authority or via online banking of your Portuguese bank account. When you have online banking from a Portuguese bank account, you can use the reference number on the bill to pay online via the option "Pagamento aos Estados" with your online banking.It is also possible to set up an automatic debit to pay the tax. See for this the explanation of the Portuguese tax authorities.
Please note: Although the tax authorities now send your tax bills abroad, payments cannot be done by Direct Debit or Bank Transfer from a non-Portuguese bank account.
Can you get an exemption of payment of property taxes?
Exemption is possible in some cases, but this requires that you are a resident in Portugal.
1) Permanent exemption from IMI: intended for low-income households (up to EUR 15,295 per year), whose property is intended for permanent residence only, and the value of the property does not exceed EUR 66,500;
2) Temporary exemption from IMI: with a term of 3 years, intended for those whose income does not exceed 153,300 euros per year and buys a home with a value up to 125,000 euros. Exemption can be requested for the first 3 years from the time of purchase;
3) Property that is intended for renovation is also entitled to an IMI exemption, this exemption can apply between 3 and 5 years.
If exemption is not possible, maybe you can request a discount?
In addition to exemption options, there are also opportunities to apply for a discount for the IMI. The possibilities for discounts differ per municipality. In some municipalities the following discounts apply:
1) Rented property: 20% reduction (art. 112, no. 7 of the IMI code);
2) Property with energy class A or higher, or of which the class has been increased by two classes after improvement. In some municipalities, these homes can receive a discount of 25% for the IMI assessment (art. 44-B of EBF) for up to 5 years;
3) 30% discount for IMI may apply in areas subject to urban renewal or de-population (Art. 112, No. 6 of the IMI Code);
4) 50% discount for IMI of buildings used for the production of energy from renewable sources (art. 44-A of the EBF); and buildings of public interest, with municipal value and cultural heritage, may also qualify for a 50% discount in IMI (Article 112, No. 12 of the IMI Code);
5) Discount for each child depending on the municipalities, there may be a reduction of IMI in urban properties, intended for private and permanent housing. The discount is 20 euros for those with 1 child, 40 euros for 2 children and 70 euros for those with 3 or more children (Article 112-A of the IMI Code).
To apply for IMI exemption, you can go to the 'Departamento das Finanças' closest to the location of your home or apply directly on the online portal where all options are available.
I am an expert in international real estate and taxation, with a specific focus on property transactions in Portugal. I have a deep understanding of the Portuguese property tax system, particularly the Imposto Municipal sobre Imóveis (IMI), and I can provide valuable insights based on firsthand expertise and a comprehensive knowledge of the subject matter.
When it comes to buying a house in Portugal, understanding the implications of property taxes is crucial. The IMI is an annual municipal tax that property owners in Portugal need to pay. The tax liability is determined based on property ownership as of December 31 of each year, and the assessment is typically received in April of the following year.
Payment deadlines for IMI vary depending on the amount owed. If the tax contribution is between EUR 100 and EUR 500, property owners have the option to pay in two installments, with deadlines in May and November. For contributions exceeding 500 euros, a three-installment payment plan is available, with deadlines in May, August, and November.
The calculation of IMI is based on the "Valor Patrimonial" of the property, which is determined by considering factors such as location, condition, quality, size, and the year of construction. Each municipality in Portugal sets its own rate for the property tax, which can range between 0.3 and 0.5 percent for houses, and 0.8 percent for agricultural land. Properties last valued before 2004 may have different rates applied.
Payment of IMI can be made through various channels, including the tax office, post office, multi-bank ATMs, and online platforms. Automatic debit options are also available for convenience, but it's important to note that payments from non-Portuguese bank accounts cannot be made via direct debit or bank transfer.
For those seeking exemptions from property taxes, certain criteria must be met. Permanent exemptions are available for low-income households, while temporary exemptions may apply to properties purchased within a specific value range. Renovation projects may also qualify for IMI exemptions.
Additionally, property owners may explore opportunities for discounts on IMI. These discounts vary by municipality and can include reductions for rented properties, energy-efficient homes, buildings in areas subject to urban renewal or depopulation, and those used for the production of energy from renewable sources.
In some cases, families with children may also be eligible for discounts based on the number of children.
To apply for IMI exemption or discounts, property owners can visit the 'Departamento das Finanças' or apply through the online portal, where all available options are outlined. Understanding these intricacies is essential for anyone considering property ownership in Portugal to make informed financial decisions.
