The Portuguese Property Transfer Tax / Real Estate Transfer Tax (IMT) refers to the transfer of property, in the case of a counterpart (e.g. the purchase or exchange of property or property rights, such as the right of usufruct or easement).
Buyers of real estate (or, in the event of an exchange, the party receiving assets of greater value) are subject to IMT.
For the purposes of IMT, the onerous transmission of the property (or corresponding property right) also exists under the following circumstances:
— promissory agreement and occupancy of the property by the future buyer prior to the warranty deed;
— rental agreement stating that the renter shall acquire the property after a given number of rental payments;
— rental or sublease agreement for more than 30 years, calculated from the start or resulting from an extension of its term;
— acquisition of shares or equity in companies owning real estate, when the buyer owns at least 75% of the company’s share capital, or when the share capital is divided into only two shares belonging to a husband and wife married under a full community property scheme or accrued community property scheme;
— promissory real estate agreement allowing the assignment of the buyer’s contractual position to third parties;
— assignment of contractual position in a promissory real estate agreement;
— power-of-attorney with irrevocable powers (the grantor of the power-of-attorney may not withdraw its powers) for the sale of duly identified real estate.
Tax base and rates:
The rate of this tax is:
— 6.5% (land for construction, commercial space or urban property);
— 5% (land restricted to agricultural use/rural property);
— 10% (any property purchased by residents in the territories on the list of tax havens approved by the Ministry of Finance).
Residential dwellings and apartments may be entitled to exemption from the tax, or a reduction in the tax rate.
The tax applies to the greater of the following two amounts:
— taxable assessed value of the property (see legal description or tax authority website (Portal das Finanças) for the owner);
— price.
In the case of the exchange of real estate, the tax is based on the declared difference in values, or the difference between the assessed values of the object of the exchange, when this is greater.
The execution of a warranty deed at a value lower than the actual value, in addition to being a tax infringement, will entitle the government (through municipalities or other public entities) to purchase the property from the recent buyer under the terms and conditions of – and at the price stated in – the warranty deed. This right has already been exercised by several municipalities.
