IMI, IMT, AIMI, SEAL. Know what taxes you have to pay if you buy a house – Economy – SAPO.pt

Last year, the state coffers raised 145 million euros alone under the IMI surcharge – AIMI, also known as the Mortágua tax, created in 2021 by the António Costa government and imposing a burden on those who own one or more houses with a total asset value of more than 600,000 euros.

As for the Municipal Property Tax (IMI), paid annually by the owner and paid to the municipal council where the house is located, it generates revenues of more than 1.5 billion euros. In this group of taxes, the Portuguese also pay 1.7 billion euros in the onerous Transfer Municipal Tax (IMT, paid when buying a house) for the 2023 budget execution revenues.

Finally, stamp duty gave the state another 2 billion euros. All of these are taxes paid on property, which come out of your pocket and increase the amount you owe when you buy or consume any goods or services.

This set of taxes (which also includes VAT, ISP, IUC, etc.) is called indirect taxes. Subsequently, the Portuguese paid nearly 32 billion euros to the state in 2023 (more than the 29 billion euros the government expected to receive). In terms of indirect taxes (IRS and IRC), they paid 58.8 billion a year.

But after all, if I decide to buy a house, what taxes will I have to pay? There are several, as explained to SAPO Bruna Melo, Tax Partner at Ernst & Young.

When is IMT payable?

The IMT applies to all property transactions located in Portugal that are of a onerous nature, i.e. transactions that require consideration. This tax does not include real estate donations, for example. It is the most important tax, levied for example when buying a house. Prior to writing this article, the buyer had to pay the IMT.

IMT is levied based on the property’s taxable property value (VPT) or the price agreed upon by the buyer and seller, whichever is higher (generally speaking, the VPT for a property is less than its market value, although there are exceptions). For residential properties, the IMT rates are progressive and follow the value taken into account for the tax. There are also different rates depending on whether the property is to be used for the buyer’s own permanent residence.

However, homes with a basic IMT value of up to €101,917 are exempt from this tax. Under a proposed law recently introduced by the new government, young people under 35 years of age who buy their first home will be exempt from this tax for a basic IMT value of up to €316,772. If the basic IMT value is higher, this exemption may only be partial.

What is stamp duty?

When buying a house, you must also pay this tax (IS), which is equal to 0.8% of the IMT value. In other words, you must add 0.8% to the amount you owe in IMT. The Parliament is discussing an exemption for young people under 35 buying their first home, under the same terms as the IMT above.

It is worth noting that IS may also apply if the purchase of the house is financed by a financial institution – if the purchase of the house involves a mortgage, IS applies to the amount required by the bank, specifically the interest rate of 0.6% (if the credit term is 5 years or more), and the commission charged by the bank at an interest rate of 3% or 4%.

Do I always have to pay IMI when the house is mine?

Once you have purchased a property, you will also have to rely on IMI, which is paid by the owner on 31 December each year. Like IMT, IMI is a municipal income tax, with the rate determined each year by the local authority within the limits set by law. For most buildings, IMI rates vary between 0.3% and 0.45%.

The tax is levied on the property value of the property and is payable in up to three instalments in the year following the relevant year, depending on the amount of tax payable:

• A one-time tax payment of up to €100 must be made in May;
• Over 100 EUR and under 500 EUR: can be paid in two installments, due in May and November respectively;
• Over €500: three installments due in May, August and November.

The IMI exemption may apply to low-VPT properties used as permanent residence by owners or tenants of households with low annual gross incomes.

How do I know if I need to pay Additional IMI (AIMI)?

AIMI is payable by the respective owner on January 1 of each year when the property of a person is at stake and its value exceeds €600,000. The tax is levied on the sum of the VPT on properties held by the same owner. For natural persons, this amount is payable only if it exceeds €600,000, and in the case of couples (joint taxation in AIMI), the limit for paying AIMI increases to €1,200,000.

AIMI levies vary between 0.7% and 1.5% and must be paid in September of the year you earn an income. This amount will be added to the IMI you also have to pay.

What is Tax Asset Value?

It is worth noting that the VPT, which is the basis for calculating the above-mentioned tax, is determined according to a formula established by law, which takes into account a series of characteristics of the property, such as area, location, allocation, “age” or quality and comfort characteristics.

Note: This article does not constitute tax advice and is intended only to present some general rules.