What is IMT? A Friendly Guide for Expats in Portugal

Hey there, fellow expats! If you’re settling down in Portugal, you’ve probably already encountered the delightful world of taxes and bureaucracy. (Isn’t it fun trying to navigate through all those forms and regulations? It’s like a never-ending puzzle!) One important piece of this puzzle is the IMT—let’s break it down together.

So, what exactly is IMT? The IMT, or Municipal Tax on Onerous Property Transfers, is a tax that you’ll need to pay when buying or selling property in Portugal. Think of it as a welcome gift to the government for letting you call this beautiful country your home!

When Do You Pay IMT?

Whether you’re purchasing your dream house with a mortgage or paying upfront, you’re required to pay the IMT on the day of the deed (or escritura). But don’t worry, not everyone has to fork over cash for this tax! There are exemptions available, which can make your life a little easier.

How Much IMT Will You Owe?

The amount of IMT you owe depends on the property’s value. Typically, the rates vary based on price brackets for residential properties. The higher the value of your new home, the higher the IMT—so it’s a good idea to do a little homework ahead of time to budget accordingly.

Are You Exempt?

Here’s where it gets interesting! In some cases, you might be eligible for an exemption from paying IMT. For instance:

• First-time homebuyers: If this is your first home purchase and it meets specific criteria, you could save some euros!
• Low-income buyers: There are options for those with lower incomes that might exempt you from this tax, too.

If you think you qualify, definitely check in with a local tax consultant or the authorities to get the scoop.

Simplified IMT Calculation Table for Primary Residence in Portugal

When buying a home in Portugal, understanding how the Municipal Tax on Onerous Property Transfers (IMT) is calculated is crucial for budgeting. Below is a simplified table that outlines the applicable rates and the deductible amounts based on the value of the property.

Explanation of the Table:

• Exemptions for Lower Values: If the property value is up to €101,917, you won’t have to pay any IMT. This exemption can significantly benefit first-time homebuyers or those purchasing affordable properties.
• Progressive Tax Rates: As the property value increases, so does the tax rate. For properties valued between €101,917 and €139,412, a 2% rate applies, with a deductible amount of €2,038.34. This means you only pay the 2% rate on the value exceeding €101,917.
• Higher Rates for More Expensive Homes: For properties valued from €139,412 to €190,086, the tax rate increases to 5%, with a deductible amount of €6,220.70. The trend continues as the value rises, with rates reaching up to 8% for properties valued between €316,772 and €633,453.
• Capping at Higher Values: Beyond €1,102,920, the tax rate stabilizes at 7.5%, indicating that while higher-value properties incur significant IMT, the percentage does not increase as sharply at this level.

Don’t Forget About Stamp Duty!

Just when you thought you were done, there’s one more thing to consider: stamp duty (Imposto do Selo). This is another tax you’ll need to pay at the time of the deed. It’s a small percentage of the purchase price, but it’s good to be prepared for this added cost.

Wrapping It Up

Navigating the IMT may seem like a daunting task in the grand maze of Portuguese bureaucracy, but knowing what to expect can make the journey a bit smoother. At C1 Broker, we’re here to help you understand the ins and outs of living in Portugal, specially everything related to insurances. We can also assist you with your house insurance in Portugal, ensuring that your new home is well protected.

If you have questions or need personalized assistance, don’t hesitate to reach out—we’ve got your back!