Buying Process - Costs
 Property Transfer Tax
This is now known as IMT, having replaced SISA tax on 1st January 2004. As of 1st January 2007 there are two separate rates to be applied, depending on whether you are buying a property for permanent living or a second or holiday home.
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For permanent residents, the following table applies:
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Value of Property
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Rate to apply
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Deduction
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Up to €85,500
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0%
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Nil
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€85,500 - €117,200
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2%
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€1,710
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€117,200 - €159,800
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5%
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€5,226
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€159,800 - €266,400
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7%
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€8,422
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€266,400 - €532,700
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8%
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€11,086
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Over €532,700
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6%
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Nil
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* For example, if the purchase price is €150,000, the formula is: €150,000 x 5% = €7,500 less €5,226 = €2,274
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However, for clients buying a holiday home, this table would apply:
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Value of Property
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Rate to apply
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Deduction
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Up to €85,500
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1%
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Nil
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€85,500 - €117,200
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2%
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€855
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€117,200 - €159,800
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5%
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€4,371
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€159,800 - €266,400
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7%
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€7,567
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€266,400 - €532,700
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8%
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€10,231
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Over €532,700
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6%
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Nil
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* For example, if the purchase price is €150,000, the formula is: €150,000 x 5% = €7,500 less €4,371 = €3,129
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Exceptions:
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- Other urban property, such as building plots or land to build an urban dwelling: 6.5%
- Rustic property (agricultural land): 5.0%
- When a company listed in one of the black-listed jurisdictions acquires a property in Portugal: punitive tax rate of 15%. (Note that if a company listed in a white-listed jurisdiction acquires a property, the same rates apply as shown in the table above)
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Stamp Duty.
This must also be paid by the buyer on all deeds, contracts and financial transactions. This tax is levied on the value of each taxable deed or operation at a tax rate which varies according to the type of deed. For real property, this is assessed at 0.8%.
Legal fees.
These are usually between 1% and 1.5% of the purchase price, plus IVA at 21% (the equivalent of VAT). We can of course recommend a lawyer to you.
Property Tax - (IMI).
General rates are payable annually and are assessed by the local authority (rather like council tax in the UK). As a guideline your annual property tax may be levied at up to 0.72% of the market value, which is assessed based on five components:
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- Construction area and implementation
- Type of usage
- Age
- Location
- Quality of construction
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Extras.
Annual maintenance (called a condominium) is payable when buying an apartment or villa on a complex, which covers the upkeep of common areas, gardens, swimming pools, etc. This of course varies from property to property, depending on the level of service provided by the maintenance company. In addition, you will need to pay for insurance and utilities (gas, electricity and water). It is usual to pay for these services monthly, by direct debit.
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