Are you a property owner or considering a mortgage in Portugal? Navigating the Municipal Property Tax (IMI) can be confusing and expensive. But don't worry; we're here to help you understand and make the most of IMI exemptions and benefits. Contact us for more information, and let us guide you through the process.
What is IMI, and why should you care?
The IMI is a yearly tax levied on property owners in Portugal. The tax rate depends on factors such as location, property value, and building type. For locals and expats alike, understanding IMI is crucial, as it can significantly impact your finances when buying, owning, or selling a property.
It is calculated as a rate levied on the property's tributary patrimonial value (VPT) using the formula: IMI = tax asset value (VPT) x applicable rate. The VPT is determined by assessing the property based on various factors, including the construction area, location, quality, comfort, age, and construction value. You can calculate yours in the Portal das Finanças.
When May rolls around, homeowners in Portugal are required to pay the Municipal Property Tax (known as IMI, previously called the local authority contribution until 2004). The payment process varies for different taxpayers, and some situations allow for a temporary IMI exemption. This article will help you understand the ins and outs of IMI, the exemptions available, and the steps to take.
Three main taxes are associated with property purchases in Portugal: IMI, IMT (Municipal Tax on Real Estate Transfers), and Stamp Duty. Owning property means fulfilling these obligations. With numerous expenses tied to homeownership, minimizing costs like taxes, spreads, and associated fees is crucial for buyers.
How IMI Exemptions Can Benefit You
There are various IMI exemptions available, and taking advantage of them can save you a significant amount of money. Here are some of the main exemptions you should be aware of:
Temporary Exemption
Applicable to new property owners with a property value (VPT) up to €125,000 and a household income below €153,300, this exemption can last up to three years.
A temporary exemption can only be granted twice to the same owner or household. Both permanent and temporary exemptions only apply if the property is intended for permanent residency. Exemption approval requires that the property address and tax address match. If any exemption conditions are not met, the household loses the exemption.
Permanent Exemption
This lifetime exemption targets families with a combined annual income below €15,295 and a primary residence with a VPT of €66,500 or less.
Other Exemptions
Owners of properties in need of rehabilitation or buildings over 30 years old might also qualify for a 3-year IMI exemption, subject to municipal approval.
IMI is based on the equity value, which is automatically calculated by finance. Homeowners should update their property's VPT with Finance as it can change over time, ensuring they are charged the correct amount. The property value update is free and valid for the following year if done by December 31. To do so, you must carry the duly completed IMI Model 1.
Recent changes
Since 2021, permanent IMI exemption has been extended to heirs with undivided inheritances who meet exemption requirements, allowing them to be exempt from paying tax on their share of the inheritance.
Tips to Save on IMI
Here are some strategies to minimize your IMI expenses:
- Update Property Value (VPT): Ensure your property's VPT is accurate and up-to-date. Request a reassessment from the tax authorities if necessary.
- Explore Other Tax Benefits: Investigate other tax benefits for property owners, such as deductions for energy-efficient upgrades or heritage properties.
- Stay Informed: Keep up-to-date with changes in tax regulations, as they may impact your eligibility for IMI exemptions.
Why choose Mortgages.pt?
Mortgages.pt is your go-to solution for all your mortgage and property-related needs in Portugal. As a trusted platform, we are committed to offering personalized services to both locals and expats, ensuring a seamless and hassle-free experience. Here's why you should choose Mortgages.pt:
1. Expertise and Local Knowledge
Our team of professional brokers has extensive knowledge of the Portuguese mortgage market as well as the ins and outs of property ownership in the country. We stay up-to-date on the latest regulations and industry trends, making sure you receive accurate and relevant information tailored to your needs.
2. Comprehensive Services
Movingto offers a wide range of services, including mortgage advice, property valuation, IMI tax guidance, first-time buyer guidance,and assistance with exemptions. Our goal is to provide a one-stop solution for all your property-related requirements in Portugal.
3. Personalized Approach
We understand that every client is unique, and we strive to provide personalized solutions to match your individual needs and financial circumstances. Our team works closely with you to understand your objectives, guide you through the process, provide the documentation required, and ensure a positive outcome.
4. Strong Network of Partners
At Mortgages.pt, we collaborate with a network of trusted partners, including banks, insurance providers, and property experts. This enables us to offer a comprehensive range of services and ensure that you receive the best possible support and advice.
5. Transparent and Trustworthy
We pride ourselves on our transparency and integrity. Our clients can expect clear communication, honest advice, and complete confidentiality throughout the process. Your satisfaction is our top priority, and we work tirelessly to help you achieve your goals.
6. Convenience and Accessibility
With our user-friendly online platform and dedicated customer support, you can access our services anytime, anywhere. We are here to answer your questions and provide guidance, making your property journey in Portugal as smooth and stress-free as possible.
Ready to Make the Most of Your Mortgage or Property in Portugal?
Don't let IMI become a burden on your finances. Contact us for more information on how to save on IMI and enjoy the benefits of property ownership in Portugal. Our team of experts is ready to help you make the most of your investment and ensure a seamless experience. Try one of our mortgage brokers for free today.
Written by
Ana Fankhauser
Ana has worked in many startups and moved to a few countries, which led her to create MovingTo. She believes that remote work is a growing trend that is here to stay and that digital nomads will move to countries that have more to offer than the ones you were born into. She mostly writes opinion pieces for MovingTo.
Connect with Ana on LinkedIn
Other Articles
