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HomeFITNESSstay abreast of values

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O Municipal Tax on Real Estate Transferscommonly known as IMT, focuses, as the name implies, on the real estate-related transactions. However, it is not always necessary to pay IMT when buying a house. Furthermore, this is a tax that applies to other situations that do not have to do with real estate.

It may seem confusing, but knowing the rules and exceptions makes it easier to understand if and when you have to pay this tax.

It came into effect in January 2004 to replace the Municipal Sisa Tax. The revenue, as happens, for example, with IMI, is delivered to the municipality where the property is located.

The objective of the Municipal Tax on Real Estate Transfers is, therefore, tax transactions involving property rights over immovable property or other businesses with an equivalent economic result.

That is why it applies, for example, to the purchase of quotas in companies that own real estate or to closed-end real estate investment funds.

In general, the Municipal Tax on Real Estate Transfers (IMT) is levied on the contract value or on the VPT (Tax Asset Value) of the property, choosing the highest one.

Let us see, then, the more specific rules of this tax.

INCIDENCE OF THE MUNICIPAL TAX ON THE TRANSMISSIONS OF REAL ESTATE

It is one of the most common situations: if you bought a house since 2014, you probably paid the IMT before the deed. From 2023, the purchase of a property worth more than 97,064 euros is subject to Municipal Tax on Real Estate Transfers. Remember that, in 2022, this amount was 93,331 euros.

The law also provides that it is charged in certain situations of the lease. For example, when the contract stipulates that, after payment of all agreed rents, the leased property becomes the property of the lessee.

Leases or subleases lasting more than 30 years also pay IMT. Please note: this obligation occurs whether the duration is established at the beginning of the contract or results from an extension. And it remains even if there is a new landlord or change in rent or other contractual clauses.

The Municipal Tax on Real Estate Transfers is also levied on promissory contracts for the acquisition and disposal of real estate that provide that the buyer may assign his contractual position to a third party.

In the case of real estate exchanges, the IMT is levied on the declared difference in values ​​or on the difference between the taxable equity values, whichever is greater.

Municipal Tax on Real Estate Transfers may also be levied on inheritances. In this case, it applies to the excess of the share in real estate that results from the division, division or alienation of the inheritance or hereditary share. That is, when one heir gets a larger portion of the inheritance than the others.

Acquisition of quotas

Apparently, the purchase of shares in companies has nothing to do with a property tax.

However, there is room for the payment of Municipal Tax on the Onerous Transfer of Property on the acquisition of shares or quotas in companies, if the following conditions are met:

  • The value of the company’s assets results, directly or indirectly, in more than 50% of real estate located in the national territory. For this purpose, the balance sheet value or, if higher, the VPT is taken into account;
  • These properties are not directly related to an activity of an agricultural, industrial or commercial nature, excluding the purchase and sale of properties;
  • Acquisition, amortization or other facts make one of the partners have at least 75% of the share capital. Or when the partners are only two married or de facto partners.

The acquisition of participation units in private subscription closed-end real estate investment funds may also pay IMT. However, this only happens if one of the holders or two holders who are married or in a de facto relationship acquire at least 75% of the fund’s units.

The realization of capital in companies or real estate funds, if made with real estate, may also be subject to the payment of IMT.

According to OE 2023, the rules for determining the taxable amount for IMT purposes, in the case of movable property given in exchange for various subject transactions provided for in Article 12 of the CIMTnow also apply to cryptoassets.

What will the IMT rates be in 2023?

For 2023, and comparing with 2022, the Executive proposes a 4% update in all IMT levels, thus being in line with the expected inflation for next year.

It should also be recalled that the rates of Municipal Tax on Real Estate Transfers vary depending on three factors:

  • Characterization of the property: being an urban or rustic building;
  • Purpose: own permanent or secondary housing;
  • Location: Mainland or Autonomous Regions.

Let’s see, then, the rates applicable in various situations.

Acquisition of an urban building or an autonomous fraction

For own and permanent housing:

Value on which the IMT is levied
(in euros)
Marginal Rate Average Rate
Up to 97,064 euros 0 0
From over 97,064 and up to 132,774 two 0.5379
From over 132,774 and up to 181,034 5 1.7274
From over 181,034 and up to 301,688 7 3.8361
From over 301,688 and up to 603,289 8 🇧🇷
From over 603,289 and up to 1,050,400 6 (single fee)
More than 1,050,400 7.5 (single rate)

Purpose other than own and permanent housing:

Value on which the IMT is levied
(in euros)
Marginal Rate Average Rate
Up to 97,064 euros 1 1
From over 97,064 and up to 132,774 two 1.2689
From over 132,774 and up to 181,034 5 2.2636
From over 181,034 and up to 301,688 7 4.1578
From over 301,688 and up to 578,598 8 🇧🇷
From over 578,598 and up to 1,050,400 6 (single fee)
More than 1,050,400 7.5 (single rate)

Acquisition of an urban building or an autonomous fraction

For own and permanent housing:

Value on which the IMT is levied
(in euros)
Marginal Rate Average Rate
Up to 93,331 0 0
From over 93,331 and up to 127,667 two 0.5379
From more than 127,667 to 174,071 5 1.7274
From more than 174,071 to 290,085 7 3.8361
From more than 290,085 to 580,066 8 🇧🇷
From more than 580,066 to 1,010,000 6 (single fee)
Greater than 1,010,000 7.5 (single rate)

Purpose other than own and permanent housing:

Value on which the IMT is levied
(in euros)
Marginal Rate Average Rate
Up to 93,331 1 1
From over 93,331 and up to 127,667 two 1.2689
From more than 127,667 to 174,071 5 2.2636
From more than 174,071 to 290,085 7 4.1578
From over 290,085 to 556,344 8 🇧🇷
From over 556,344 to 1,010,000 6 (single fee)
Greater than 1,010,000 7.5 (single rate)

EXEMPTIONS FROM THE MUNICIPAL TAX ON THE TRANSMISSIONS OF REAL ESTATE

As we saw in the previous point, the IMT exemption will apply if you buy a property for your own and permanent residence with a value of less than 97,064 euros.

The exemption from Municipal Tax on the Onerous Transfer of Real Estate also applies when the acquisition is made by State bodies, municipalities and associations and federations of municipalities governed by public law.

Foreign states that acquire real estate for the headquarters of diplomatic missions, legal persons with public utility status, IPSS and religious legal persons also do not pay IMT.

The acquisition of buildings individually classified as of national, public or municipal interest, as well as the acquisition of places for holding cultural shows are also among the exemptions provided for.

The purchase of buildings for resale and the acquisition, by credit institutions, of properties in foreclosure proceedings, bankruptcy, insolvency or in lieu of payment are also covered by exemption from IMT.

WHO HAS TO PAY THE IMT?

The Municipal Tax on Real Estate Transfers must be paid by the person who acquires the property.

In inheritance divisions and divisions, the payment of the IMT is up to the heir with real estate whose value exceeds that of his share in these assets.

If it is an exchange, whoever receives the goods of greater value pays.

HOW DO I PAY THE MUNICIPAL TAX ON ONEROUS REAL ESTATE TRANSMISSIONS?

The IMT payment must occur before the transfer of goods. If this takes place outside Portugal, it can be paid in the following month.

As with other taxes, you can settle it at the Finance, CTT, Multibanco or homebanking🇧🇷

Article originally published in September 2021. Updated in November 2022.

  • Electronic Republic Gazette: Decree-Law No. 287/2003 – approves the Municipal Property Tax Code and the Municipal Tax Code on Real Estate Transfers

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