PROPERTY PURCHASE TAXES
Property Purchase Tax (IMT)
This is a one off payment made to the Portuguese State in respect of property transfer tax – payable immediately prior to the final deed being carried out. The tax-free limit is €115 000 (one hundred and fifteen thousand Euros). Above this, there is a sliding scale up to a maximum of 6% of the purchase price for a property purchase above €688 544 (six hundred and eighty- eight thousand and five hundred and forty-four Euros). The purchase of land (urban or
agricultural) only is subject to a flat rate of 6.5% tax – irrespective of the sales value.
(Imposto de selo)
This is paid also on completion – 0.8% of the sales price.
Notarial & Registration fees
A small tax is payable to the Land Registry in order to register the property in your name and a fee is also paid to the Notary Public for overseeing the Final Deed. These amounts vary, however, should not exceed approx. €1.000 unless you are taking a mortgage with any of the local Portuguese banks, in which case, this tax will be slightly higher.
Municipality tax – IMI
An annual municipality tax for services provided, garbage collection and removal, roads, schools etc, determined by two factors, namely i) the ratable value of your property as assessed by the local municipality and ii) the percentage tax rate as set out by the municipality. These taxes vary from each town anywhere between 0.4% to 0.8% of the rateable value depending on the area/region. These ratable values are periodically reassessed.
Capital Gains tax
This tax is payable on the profit made from a sale between the original purchase price and the sale price.
Tax residents in Madeira pay 20% on 50% of the profit – or nothing at all if the asset sold was registered as the vendors principal residence for at least the last 6 months and the “gain” (profit) is reinvested into a new principal residence in Madeira. There are time limits set for this reinvestment and should all of the gain not be used in the subsequent purchase, CGT is due on the balance.
Non-residents pay 25% on the total gain less some allowances.
Any assets acquired prior to the 1st January 1989, currently registered in the name of the owner on that date, are 100% exempt of CGT.
The Portuguese banking system provides a range of financing solutions targeted at non-residents.
We advise you to be aware of your financial possibilities before beginning your property search, and are pleased to recommend the brokerage below in the UK, who will make a qualified assessment on your behalf, so that you can begin your property search with the confidence of being financially qualified.