If you buy a property in Portugal, you will pay additional taxes on the purchase price. This article will explain more about the additional costs and taxes when buying a property in Portugal.
The IMT or municipal transfer tax
The IMT is a transfer tax for the municipality. The applicable rates depend on the type of property and the reason for purchase. For example, the IMT for residential buildings has a progressive rate. If the purchase price is between 92,407 euros and 574,323 euros, you usually pay around 4 to 5 per cent on the purchase price. If the purchase price exceeds 574,323 euros, a flat rate of 6% applies.
However, if you buy a Portuguese property for the purpose of permanent residence, the progressive tax brackets are lower. To benefit from this more favourable tax, you should mention this in the notarial deed of purchase. You then have six months to move in.
Registration fees in Portugal
In addition to the IMT, you will also pay 0.8 per cent registration duty in Portugal on the purchase price. This is a fixed rate.
In Portugal, there is no VAT on real estate. However, for new construction houses, VAT is 23% charged on construction and material costs, but the posted selling price is basically inclusive of VAT.
Note: you will also have to pay the IMT and registration fee in the case of new construction.
Notary fees and land registry
Although the role of the notary during the purchase process is limited, you bear the notary fees. These costs depend on the purchase price, but calculate around 1 to 2% for this.
In addition, your property titles need to be registered at the land registry. This is a fixed cost of EUR 250.
Fees and administrative costs of independent counsel
Since the notary in Portugal does not advise you on the legal situation of the property, it is important that you take a counselor with you. He will advise you on the ownership situation, rights in rem, mortgages & debts, outstanding taxes and the urban planning situation of the property.
Independent counsel's fees also depend on the purchase price and complexity of the case.
There are also administrative costs for such things as requesting official documents and transferring electricity and water contracts into your name. Expect between €250 and €400 for this.
The additional costs on a property purchase in Portugal are usually much lower than, say, in Belgium or Spain. Indeed, registration fees in Portugal and other taxes are considerably more favourable. If you buy a property with a budget of 200,000 euros, you will come to about 7.5 -8% additional costs in total.