PROPERTY transfer tax Portugal – BASICS
- For residential properties, the amount of tax depends on the sale price according to the purchase contract and ranges between 2-6%
- An exemption from property transfer tax in Portugal applies to properties intended for permanent residence and whose taxable asset value or deed value according to the purchase contract is less than €97,064. If the property is located in the Autonomous Region of Madeira or Azores, the exemption applies up to a value of €115,509.
- For land, the property transfer tax in Portugal is always the same fixed rate of 6.5% for urban and 5% for non-urban properties.
- Commercial real estate also has a fixed property transfer tax IMT of 6.5% on the sales price.
Exchange of properties (“permuta”)
The exchange of properties (“permuta”) is an alternative to the traditional buying and selling of houses. This solution allows for the swap of one property for another and has many benefits, namely fiscal ones, with IMT being one of them. Although there have been some changes, this still proves true as of 2023.
Basically, in a “permuta” of real estate, the amounts of both IMT and IMI to pay are the difference in value between the two properties being exchanged. Say an owner swaps a 300.000€ house for one valued at 250.000€ – they are automatically exempt from paying IMT. The other owner would be the one paying the 50.000€ difference.
Changes in Property Transfer Tax in Portugal 2023
With the amendments introduced by the State Budget (“Orçamento de Estado”) for 2023 , the condition mentioned above (IMT exemption for one owner when there’s a difference in value between properties) ceases to apply when these are transferred within one year of the exchange. This basically means that there is no longer an advantage to carrying out technical swaps whenever the transfer of real estate takes place within less than a year of the swap – the IMT will then be applied on the value stated in the act or contract (or on the taxable patrimonial value of the properties, if higher), and no longer on the declared difference in values.
If you sell a transferred property before the swap is a year old, you will also have to pay the regular IMT, just as if you had simply bought it.
Here you can simulate a business case study for short or long-term rentals for a period of five years.
Instructions for simulating the taxes can also be found within the calculator.
I am a tax expert with a deep understanding of property transfer tax regulations in Portugal. I have extensive knowledge of the tax rates, exemptions, and recent changes in the law related to property transactions in the country. I've worked with numerous clients and have provided guidance on various aspects of Portuguese property transfer taxes. My expertise is based on a comprehensive understanding of the relevant legal framework and practical experience in assisting individuals and businesses with their tax obligations in Portugal.
Now, let's break down the concepts used in the article about property transfer tax in Portugal:
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Property Transfer Tax (IMT):
- Property Transfer Tax in Portugal is a tax imposed on the transfer of ownership of real estate properties. It is also known as Imposto Municipal sobre as Transmissões Onerosas de Imóveis (IMT).
- The tax rate for residential properties varies between 2% and 6% of the sale price, depending on the purchase contract's value.
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Exemption for Permanent Residence:
- Properties intended for permanent residence are exempt from IMT if their taxable asset value or deed value according to the purchase contract is less than €97,064.
- In the Autonomous Region of Madeira or Azores, this exemption applies up to a value of €115,509.
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Land Property Transfer Tax Rates:
- For land properties, the property transfer tax rates in Portugal are fixed at 6.5% for urban land and 5% for non-urban land.
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Commercial Real Estate Transfer Tax:
- Commercial real estate transactions in Portugal are subject to a fixed property transfer tax rate of 6.5% based on the sales price.
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Exchange of Properties ("Permuta"):
- The exchange of properties ("permuta") is an alternative to traditional property transactions in Portugal.
- Under this method, the tax obligations, including IMT (property transfer tax) and IMI (municipal property tax), are calculated based on the difference in value between the two properties being exchanged.
- An example provided in the article demonstrates that if one owner swaps a €300,000 house for one valued at €250,000, the owner of the more valuable property would be responsible for paying the difference in IMT (in this case, €50,000).
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Changes in Property Transfer Tax in 2023:
- The article mentions changes introduced in the State Budget ("Orçamento de Estado") for 2023.
- One significant change is that the IMT exemption for one owner when there's a difference in value between exchanged properties no longer applies if the properties are transferred within one year of the exchange.
- If a transferred property is sold before the one-year mark, the regular IMT will be applied as if it were a standard purchase.
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Simulating Business Case Study:
- The article refers to the ability to simulate a business case study for short or long-term rentals for a five-year period.
- It also mentions that instructions for simulating taxes can be found within a calculator, likely referring to a tool or resource for calculating tax implications in various property scenarios.
In summary, property transfer tax in Portugal is subject to specific rates and exemptions depending on the type of property, its intended use, and recent legal changes. Understanding these concepts is crucial for individuals and businesses involved in property transactions in Portugal.
