When venturing into the Portugal real estate market, especially at the higher end, being acquainted with the various types of property taxes is essential. Here’s a breakdown of the primary property taxes you’ll encounter:

• Stamp Duty (Imposto do Selo): This is a one-time tax incurred at the point of purchasing a property. It’s calculated based on the transaction value, and its rate is generally 0.8%. For luxury properties, understanding the exact cost of stamp duty is crucial as it adds to the initial investment.

• Municipal Property Tax (IMI – Imposto Municipal sobre Imóveis): IMI is an annual tax levied on the property’s municipal tax value. The rate varies depending on the type and location of the property, ranging typically from 0.3% to 0.45%. High-value properties in affluent areas may attract higher rates, making it a significant consideration for wealthy property buyers.

• Property Transfer Tax (IMT – Imposto Municipal sobre Transmissões): IMT is also a one-time tax paid at the point of purchase. It’s a progressive tax based on the purchase price or the property’s tax value, whichever is higher. The tax rate escalates with the property value, so high-ticket properties will incur a substantial IMT cost.

• Additional to Municipal Property Tax (AIMI): AIMI is an additional annual tax targeting higher-value properties, making it particularly relevant for wealthier property owners and investors. The rate is progressive, starting at 0.4% for individuals and 0.7% for companies, with a notably higher rate for corporate-owned properties. Understanding the implications of AIMI is crucial for those owning or eyeing premium real estate as it significantly impacts the annual tax liability.

These taxes collectively contribute to the overall cost of owning property in Portugal. For those invested in the luxury real estate market, having a precise understanding of these taxes is vital to ensure compliance and make informed financial decisions.