IMT, the Municipal Tax on the Transfer of Property, is payable to the State on the transfer of property rights. In reality, this tax is known to most people because it has to be paid when buying/selling a property in Portugal. However, it is levied on other businesses with a similar economic outcome. And in 2023, its incidence will be extended. However, the major change in IMT this year is associated with the value of the brackets in which this tax is levied.
To understand what will change with IMT in 2023, here's a summary of the changes coming into force this year.
In what situations will IMT be payable in 2023?
Bearing in mind that IMT is a tax applied to property right transactions and businesses with an identical outcome, there are several situations in which IMT is payable, such as:
Transactions involving ownership rights over real estate
In this case, it covers various situations such as the purchase/sale of a house, promissory contracts for the acquisition and disposal of real estate, property swaps, inheritances or even some rental and sublease contracts.
Transactions that give rise to the payment of IMT include:
- Purchase of a property worth more than 97,064 euros. In 2022 it applied to properties worth more than 93,331 euros.
- A promissory contract for the purchase and sale of real estate when it stipulates that the purchaser may assign his contractual position to another person (third party);
- In exchanges, the declared difference in value or the difference between the VPT (Taxable Patrimonial Value), whichever is higher.
- For example, in inheritances, when one heir gets a larger share of the inheritance than the other heirs.
- And in certain leasing and sub-letting contracts where, after the agreed rents have been paid, the leased goods become the property of the tenant or when the lease or sub-lease is for more than 30 years (long-term lease).
What will change in the IMT brackets in 2023 for a permanent home?
At the moment, only the new IMT brackets for 2023 and the rates to be applied in mainland Portugal are known, as the rates to be applied in the autonomous regions of Madeira and the Azores have not yet been published.
Thus, in the case of a permanent home, the following brackets, rates and portions to be deducted next year apply:
For own and permanent housing
If the property purchased is a permanent dwelling, the following brackets, rates and portions to be deducted will apply in 2023:
Property value Marginal rate Amount to be written off
Up to €97,064 0% 0
Between €97,064 and €132,774 2% €1,941.28
Between €132,774 and €181,034 5% €5,924.50
Between €181. 034 and 301.688€ 7% 9.545,18€
Between 301.688€ and 603.289€ 8% 12.562,06€
Between 603.289€ and 1.050.400€ 6% (single) -
Over 1.050.400€ 7,5% (single)
For second homes
If the property is for a second home, or another purpose, the brackets and respective rates and installments to be deducted next year are as follows:
Property value Marginal rate Amount to be written off
Up to €97,064 1% 0
Between €97,064 and €132,774 2% €970.64
Between €132,774 and €181,034 5% €4,953.86
Between €181. 034€ and 301.688€ 7% 8.574,54€
Between 301.688€ and 578.598€ 8% 11.591,42€
Between 578.598€ and 1.050.400€ 6% (single) -
More than 1.050.400€ 7,5% (single) -
Taking into account the IMT values in 2022, with this year's update, you will pay less for this tax. For example, if you buy a property for 200,000 euros in mainland Portugal for your own permanent home in 2023, you'll pay 4,454.82 euros. In 2022, you would have paid 4,821.93 for the same property under the same conditions.
This is because a house worth 200,000 euros in mainland Portugal is taxed at 7%, so you would have to pay 14,000 euros in IMT. But discounting the value of the plot to be written off, 9,178.06 euros is deducted from that amount.
In other words, by 2023, you'll be able to see a reduction of around 400 euros on most properties, regardless of the bracket or purpose.
Source: Doutor Finanças