• COSTS OF ACQUISITION OF PROPERTIES

    COSTS OF ACQUISITION OF PROPERTIES IN  PORTUGAL

    COST OF ACQUISITION OF BUILDINGS IN PORTUGAL

    Once you have made the decision to buy a property in Portugal it is time to proceed with the formalization of the purchase itself and for this should add costs associated with the purchase process.

    The cost of purchasing real estate in Portugal can vary greatly depending on the situation of the buyer, the value of the property, and the context of the purchase, that is, if it isa mortgage credit or not.

    Let's look at the costs involved in buying property in Portugal.

    IMT (Municipal Tax On Real Estate Forfeiture)
    IMI is a tax that results from a percentage applied to the property value, and is applied whenever there is a change of ownership of real estate in Portugal.

    Values range from 2% to 8% on the property of the transaction value, the following formula being applied using Table 1 as a reference:

    IMT = acquisition value X Marginal rate - Amount Deductible
    However, we point out that this value changes in the case of the acquisition of a property other than permanent residence (i.e. holiday property or investment), in this case the same formula applies, but use Table 1.2 as a reference. Read more.

    Stamp tax

    The stamp duty is always applied on the value of the acquisition of the property in Portugal using the following formula:

    • Stamp Tax = Acquisition Amount * 0.008.


    In case the buyer of the property has resorted to mortgage bank credit is applied again the Stamp Tax, according to the following formula:

    • Stamp Tax on the value of the loan = Amount of the loan * 0.006.

    IMI (Municipal Property Tax)

    IMI is a tax paid annually, and is applied on the net asset value.

    The equity value is defined in the CIMI (Municipal Tax on Real Estate Code), so it can be different from region to region, since each municipality has the power to decide the percentage value to be charged by CIMI, which can vary between 0.3 % to 0.8%.

    There are some benefits in the following cases:
    - in the case of urban rehabilitation projects, where special rates are applied;
    - in the case of the taxable person (or his household) whose taxable income does not exceed EUR 153 000;
    - and some other exemptions such as exemptions from Real Estate Investment Funds and real estate for tourist use.

    It is possible to enjoy some more exemptions, but they should be analyzed on a case-by-case basis.

    Additional expenses
    They can also count on additional expenses involved in the deed of Purchase of the property, such as expenses of the Notary in the approximate amount of 300 € *, and 225 € for the Registry.

    For those who use bank credit for housing the value is approximately 600 € * in the Notary and 400 € for the Registry.

    * These values are approximate and we point out that the costs involved with Notaries vary from entity to entity, and may also vary depending on the value of the property.


    1.Table for own and permanent housing

    Acquisition Value  Rate Amount Deductible
    To 92.407,00€ 0% 0,00
    From 92.407,00€
    to 126.403,00€
    2% 1.848,14€
    From 126.403,00€ to 172.348,00€ 5% 5.640,23€
    From 172.348,00€
    to 287.213,00€
    7% 9.087,19€
    From 287.213,00€ to 574.323,00€ 8% 11.959,32€
    Superior of 574.323,00 6% -

    1.2 Tabela para Habitação não permanente (férias ou investimento)

    Acquisition Value  Rate Amount Deductible
    To 92.407,00€ 1% 0,00
    From 92.407,00€
    to 126.403,00€
    2% 924,07€
    From 126.403,00€ to 172.348,00€ 5% 4.716,16€
    From 172.348,00€
    to 287.213,00€
    7% 8.163,12€
    From 287.213,00€ to 574.323,00€ 8% 11.035,25€
    Superior of 574.323,00 6% -

     

    Example of purchase without credit:

    A couple of retired French decide to buy a property in Portugal, amounting to € 170,000.
    To this is added the IMT, stamp duty and additional expenses.

    Using Table 1 as a reference:
    IMT = € 170,000 X 5% - € 5,640.23 = € 2,859.77

    In this case the IMT would be € 2,859.77, the Stamp Tax: € 170,000 X 0.008 = € 1,360.00
    and additional expenses, € 300.00 * in the Notary and € 200.00 for the Registry, totaling € 4,719.77.


    Note: In this case the bank credit feature is not used.

    If you need more information about this or other matters related to the acquisition of real estate in Portugal, do not hesitate to contact us!