About Us Contact Us Site Map

Property ownership

Taxes during ownership

The costs of owning a property in Portugal can differ depending on the type and size of the property, its location, and other individual circumstances. However, as a general guide, owners should bear in mind the following:

• Property tax – municipal property tax (IMI) is calculated according to the registered value of the property. The registered values are often low and may not be anything like the real value of the property. However, the law is changing and the registered values are rising but are still lower than council tax on a UK property. It is charged annually and the rate ranges between 0.2 – 0.8%, depending on the type of property and where it is located. When the owner of the property lives in a country or area with a lower tax rate, the payable rate will automatically be 0.5%.
  
  Periods of exemption between three and six years apply if the property is to be the owner’s permanent home at some point in the future, or if it is to be rented out. The period of exemption depends on the registered value of the property.
• Income tax - any activity from letting the property must be declared by the owner. Taxable rental income is the gross income, minus costs such as maintenance, repairs, municipal tax and insurance premiums. This net amount is taxable at a flat rate of 15%. There is a treaty between Portugal and both the UK and Ireland, so double taxation relief on Portuguese assets is available in these countries.
• Capital gains tax – when selling the property, the vendor will have to pay tax on the profit made. This is treated as part of taxable income for the year in which the gains occur and does not have a separate system of assessment. It is charged at a flat rate of 25% of the difference between the sale price and the sum of the purchase price, ownership transfer costs, and costs of improvement that have taken place in the last five years before the sale. For Portuguese residents, only 50% of the gain is taxable.
  

Related items

Documents and Reports

	Portugal property investment report (420Kb)
	Portugal country guide (1Mb)
	Portugal property buying guide (1Mb)
Documents and Reports

Other related pages

Bookmark with:	What are these?
DeliciousDiggredditFacebookStumbleUpon