Source: Adobe Stock Author: Redaction In 2024, the link between the Additional to the Municipal Property Tax (AIMI) and Social Security once again stood out in the landscape of Portuguese public finances. This tax, created to target higher-value property holdings, was earmarked for the Social Security Financial Stabilisation Fund (FEFSS), reinforcing the so-called financial “cushion” of the public pension system. What is the Additional to the IMI? The AIMI was introduced during António Costa’s first government and is levied on the total value of urban properties owned by individuals and companies, except those classified as “commercial, industrial or service use” and those exempt from IMI in the previous year. This tax is paid annually in September, based on the tax asset values (VPT) recorded as of 1 January of the respective year. Unlike the traditional IMI, which applies to each individual property, the AIMI taxes the combined VPT of all urban properties owned by a taxpayer, with different rates depending on the total value and ownership type. How does AIMI work? For individuals, there are three rate thresholds: 0.7% on VPT exceeding €600,000; 1% on amounts above €1 million; 1.5% for property portfolios over €2 million. For couples opting for joint taxation, the exemption thresholds double to €1.2 million, €2 million and €4 million respectively. Companies pay a flat rate of 0.4% on applicable property values. Entities under more favourable tax regimes are taxed at a rate of 7.5%. AIMI revenue in 2024: growth and impact According to the 2024 General State Account, AIMI revenue grew by 10.9% compared to the previous year, reaching €139.48 million transferred to the FEFSS. This marks an increase of €13.7 million over 2023, reversing the slight decline recorded in that year. Before deductions, total AIMI revenue amounted to €147.9 million, up from €145 million in 2023. This growth is significant for the sustainability of Social Security, as the FEFSS functions as a financial reserve to ensure future payment of pensions and other social benefits. Since the creation of AIMI, its dedicated revenue has been a crucial contribution to strengthening the system’s stability, particularly in a context of population ageing and pressure on public accounts. Recent years’ trends Figures show that in 2022, AIMI revenue allocated to Social Security was €127.3 million, slightly decreasing to €125.8 million in 2023. The 2024 increase reflects both the appreciation of real estate assets and efforts to combat tax evasion and improve collection efficiency. Relevance for Social Security Allocating AIMI revenue to the Social Security Financial Stabilisation Fund is a strategic measure to enhance the sustainability of the public pension system. The fund acts as a financial “buffer”, enabling the State to respond to potential future financing needs, particularly during periods of demographic or economic stress. The reinforcement of the FEFSS with AIMI funds is seen as a way to diversify Social Security financing sources, reducing reliance solely on contributions from workers and employers. Future outlook With the ongoing appreciation of Portugal’s real estate market, AIMI revenue is expected to continue contributing significantly to Social Security in the coming years. However, the future of this tax will also depend on factors such as potential legislative changes, market dynamics and housing policies. Balancing tax fairness, social support, and financial sustainability will remain a core challenge for the Government, which must ensure that IMI and AIMI revenue effectively supports social protection and economic stability goals. AIMI revenue plays an increasingly important role in financing Social Security in Portugal. The 2024 increase reinforces the importance of this link between taxation and social protection, contributing to the sustainability of the public pension system and the financial security of future generations. Monitoring AIMI developments will be crucial to ensuring that this mechanism continues to support Social Security and citizens’ needs effectively.
Source: Adobe Stock Author: Redaction The IMI (Municipal Property Tax) settlements for 2025 are being reviewed by the Tax and Customs Authority (AT), which will adjust all cases where an exemption from the tax was requested. This measure aims to correct any potential errors and ensure that taxpayers benefit from the fiscal rights provided under current legislation. IMI Exemptions for Landlords with Frozen Rents The main update concerns landlords with old rental contracts, signed before the introduction of the Urban Lease Regime (RAU), who, according to the updated Statute of Fiscal Benefits (EBF) in the 2024 State Budget, are entitled to an IMI exemption. These property owners, whose rental income is taxed under Category F, should be exempt from paying the tax for the duration of their rental contracts. However, many of these landlords have received IMI settlement notices for 2025, even though they are legally exempt, leading to complaints and requests for review with the Tax Authority. In response, the AT has committed to reviewing all settlements by the end of June 2025, adjusting the amounts due or refunding any overpaid amounts, depending on the case. Review Process and IMI Refunds To facilitate the review of settlements, a specific form was made available on the Finance Portal in July 2024 for property owners who qualify for this exemption. This exemption update is still in progress, which explains the delay in correcting settlements for some taxpayers. In cases where IMI has already been paid, the AT may opt to adjust future payments or proceed with refunding the overpaid amounts, depending on the taxpayers profile and the amount involved. This is a crucial measure to ensure compliance with fiscal regulations, preventing instances of undue charges. Impact on Property Owners Finances For many property owners, especially those with old rental contracts, this review of IMI settlements represents a significant financial relief. In many cases, frozen rents have failed to keep up with inflation and rising property maintenance costs, making the IMI exemption a key measure to protect landlords income. Furthermore, this correction is essential to ensure investor confidence in the Portuguese real estate market, ensuring that fiscal rights are respected and that the tax system operates in a fair and transparent manner. Deadlines and Procedures for 2025 Taxpayers who qualify for these exemptions should be mindful of the deadlines for submitting their review requests. The deadline for the payment of the first IMI instalment, which normally occurs in May, has been extended until the end of June 2025, allowing affected taxpayers time to regularise their situation with the Tax Authority. If the IMI debt is less than €100, the payment must be made in a single instalment. For amounts exceeding this, taxpayers can opt for payment in two or three instalments, depending on the total amount. This flexibility is particularly important for landlords who are awaiting the correction of their settlements. What to Expect for the Future With the promise of a review of the IMI settlements in progress, it is expected that property owners will benefit from a fairer and more transparent system for 2025 and beyond. For landlords with frozen rents, this correction is an important step in ensuring that their fiscal rights are respected, promoting a more balanced and competitive real estate market. Through this measure, the Portuguese government reinforces its commitment to supporting property owners who provide affordable housing, balancing fiscal responsibilities with taxpayer rights.
Source: Adobe Stock Author: Redaction In recent times, a specific group of landlords in Portugal has faced a significant tax dilemma related to the Municipal Property Tax (IMI). These are the owners of properties with frozen rents, who, according to the 2024 State Budget (OE2024), should be exempt from paying IMI. However, despite this promised exemption, many of these landlords are now receiving IMI payment notices, creating confusion and concern. This section explores the situation and the challenges faced by these property owners. IMI Exemption and the 2024 State Budget The 2024 State Budget introduced an IMI exemption specifically for landlords with rental contracts signed before 1990. This measure was designed to reduce the financial burden on these landlords, who have been unable to increase their rental income for decades due to rent freezes, significantly affecting their financial stability. The goal of this exemption is to provide some compensation for these financial losses, but its implementation has faced significant challenges. The Reality for Landlords with Frozen Rents Despite being clearly outlined in the legislation, many landlords of properties with frozen rents are still receiving IMI bills, which contradicts the governments promise. These property owners, who should be exempt from this tax, are now being charged a fee that, by law, should not apply to them. This situation has led to frustration and uncertainty, as many expected the exemption to be directly reflected in their IMI notices. Procedures at the Tax and Customs Authority (AT) When landlords seek clarification from the Tax and Customs Authority (AT) about their situation, many are advised to pay the tax first and then file a formal complaint. This process places an additional burden on landlords who are already struggling financially due to frozen rents. Moreover, many landlords have expressed frustration over the lack of clear guidance and the slow pace at which these cases are being handled. Delays in Case Resolution and Fiscal Uncertainty The situation is even more concerning for landlords who submitted their exemption requests nearly a year ago and are still waiting for a response from the AT. Despite the exemption request being a key requirement for these landlords to access financial relief, the AT continues to await higher-level instructions, further increasing fiscal uncertainty and creating a climate of frustration. The lack of a timely response has put many property owners in a difficult position, especially as the IMI payment deadline approaches. Impact of Administrative Inaction The failure to correctly apply the IMI exemption can be seen as a significant administrative inefficiency, which negatively impacts property owners and fosters a sense of injustice. Landlords expect the AT to be more proactive in implementing the exemption, without requiring them to navigate a lengthy and complex process to resolve an issue that is clearly addressed in the legislation. This inaction by the AT risks undermining landlords trust in the tax administration and could complicate the resolution of similar issues in the future. The Need for IMI Exemption Reform This episode highlights the urgent need for reform in the IMI exemption process for landlords with frozen rents. It is essential that the AT implements measures to streamline the handling of these requests and ensures that property owners can benefit from the exemption without unnecessary bureaucratic hurdles. Additionally, a review of the fiscal policies for landlords with frozen rental contracts could contribute to greater tax fairness and reduce the financial burden that this group of property owners has faced over the years. The ongoing situation, where landlords with frozen rents are being charged IMI despite the 2024 State Budget exemption, reveals communication gaps and weaknesses in the implementation of fiscal legislation. Although the exemption was intended as a positive measure, its inconsistent application has caused financial losses and uncertainty for property owners. It is crucial for the AT to resolve these issues quickly, ensuring that the exemption is correctly applied and allowing landlords to benefit from the compensation provided by the law. Without effective action, the climate of dissatisfaction and mistrust is likely to persist, further straining the relationship between property owners and the tax authorities.
Source: Adobe Stock Author: Redaction The Portuguese government has made tax simplification a key priority for 2025, aiming to reduce administrative burdens on both citizens and businesses, increase transparency, and make it easier to comply with tax obligations. These changes, approved under Decree-Law No. 49/2025 of 27 March, will come into effect on 1 July, covering various areas of the Portuguese tax system, including personal income tax (IRS), corporate tax (IRC), municipal property tax (IMI), property transfer tax (IMT), and the Tax Benefits Statute. IMI Simplification: Less Bureaucracy for Property Valuation One of the main changes introduced by this new legislation focuses on the Municipal Property Tax (IMI). The process for determining the taxable value of urban properties has been simplified, removing the need for inspections for older buildings. Now, for buildings constructed before 7 August 1951, it is sufficient to submit architectural plans, preferably electronically, rather than requiring in-person inspections. This significantly reduces costs and processing times for property owners. Additionally, land for construction now benefits from a simplified process, with only the submission of planning permits or prior notifications required via the Tax Portal, as long as these documents are not automatically provided by local authorities. IMT Changes: Simplified Exemptions for Resellers For the Municipal Property Transfer Tax (IMT), professionals purchasing properties for resale also benefit from reduced bureaucracy. The certificate recognising the regularity of resale activities can now be obtained directly through the Tax Portal, eliminating the need for additional processes to confirm this exemption. VAT Simplification and Other Reporting Obligations The government has also taken steps to eliminate various redundant reporting requirements affecting both businesses and individuals. Key measures include: The removal of annexes Q and O in the Simplified Business Information (IES), simplifying the reporting of stamp duty and customer VAT data. The elimination of reporting obligations for resident taxpayers receiving savings income in the form of interest from other EU member states or dependent territories. The introduction of automatic VAT return submission for taxpayers without taxable operations, making it easier to regularise tax situations. Simplified Procedures for Small Amounts and International Shipments To further simplify the system, the legislation exempts withholding tax for small amounts under €25, reducing the administrative burden for businesses managing small transactions. Additionally, for low-value postal shipments and parcels below €1,000, the new law eliminates the need for export customs declarations to obtain an exit certificate. Instead, a simplified export certificate will be issued, facilitating VAT deductions for these transactions. Harmonisation of Deadlines and Streamlined Procedures Another area of focus is the harmonisation of deadlines for fulfilling tax obligations. From 2025, deadlines for IRS declarations, as well as the validity of certificates of regular tax and social security status, will be aligned, with most declarations due by the end of February. Other simplifications include the removal of physical plan requirements for certain types of properties and the waiver of activity declaration requirements for taxpayers with only a single taxable transaction, reducing the complexity of starting a business for small entrepreneurs and freelancers. Impact on Taxpayers With these measures, the government aims to improve the taxpayer experience, promoting a more transparent and efficient relationship with the Tax Authority. For businesses, this means less time spent on paperwork and more focus on growth, while for individuals, it promises greater clarity in tax obligations and fewer administrative headaches. By cutting red tape and eliminating redundancies, these changes mark a significant step towards making the Portuguese tax system simpler and more accessible, reflecting the governments vision of creating a more favourable and competitive economic environment. If you want to benefit from these new rules or simply stay informed about your tax obligations, now is the time to prepare for the changes coming into effect on 1 July 2025.
Source: Adobe Stock Author: Redaction 1) What Are Real Estate Capital Gains? 2) How to Calculate Capital Gains When Selling a House 3) Taxation of Capital Gains 4) Exemptions and Tax Benefits 5) Practical Examples of Capital Gains Calculation 6) How to Declare Capital Gains on Your Tax Return What Are Real Estate Capital Gains? Capital gains refer to the profit made from selling a property, which is the difference between the selling price and the purchase price, adjusted for expenses and improvements. This profit is subject to income tax (IRS), but it is not always fully taxable. How to Calculate Capital Gains When Selling a House Calculating capital gains is relatively straightforward, but it involves several steps to ensure only the actual profit is taxed. The basic formula is: Capital Gains = Selling Price - (Purchase Price + Expenses + Improvements) Selling Price: The amount received from the sale of the property Purchase Price: The original price paid for the property, adjusted for inflation using the official currency depreciation coefficients. Expenses: Includes taxes, notary fees, registration costs, and estate agent commissions. Improvements: Investments made in the property, provided they are properly documented. Taxation of Capital Gains Generally, only 50% of the capital gains are taxable under the IRS, with the amount included in the sellers annual taxable income. This means the tax payable depends on the marginal IRS rate, which can range from 14.5% to 48%. Exemptions and Tax Benefits Not all capital gains are subject to tax. Several situations allow for exemption or reduced tax rates: Reinvestment in Primary Residence If you use the proceeds from the sale to buy another primary residence, you may be exempt, as long as the reinvestment occurs within 36 months of the sale. Exemption for Properties Purchased Before 1989 Properties purchased before the IRS Code came into effect (1 January 1989) are exempt from capital gains tax. Mortgage Repayment Exemption Between 1 January 2022 and 31 December 2024, gains from a second property could be exempt if the sale proceeds are used to pay off a mortgage. Practical Examples of Capital Gains Calculation Example 1 - House Sold in 2025 for €300,000, Bought in 2000 for €150,000 with €20,000 in Renovations: Capital Gains = €300,000 - (€150,000 + €20,000) = €130,000 Taxable (50%) = €65,000 Example 2 - House Purchased Before 1989 and Sold in 2025 for €500,000: Capital Gains = €500,000 - (purchase price + expenses) = Exempt How to Declare Capital Gains on Your Tax Return To declare capital gains, you must complete Annex G of the IRS tax return. For properties purchased before 1989, you should complete Annex G1. Understanding how capital gains work is essential for anyone planning to sell property in Portugal. Plan your sale carefully, take advantage of potential exemptions, and minimise your tax impact to maximise the return on your real estate investment.
Source: Adobe Stock Author: Redaction Due to technical problems accessing the Tax Authority portal, caused by the power outage that affected Portugal and Spain, the Government decided to extend the deadline for the payment of the Municipal Property Tax (IMI). The new deadline for the payment of the first instalment or, if applicable, the single payment of IMI will be 30th June 2024. What is IMI? Municipal Property Tax (IMI) is an annual tax collected by municipalities, based on the property’s taxable value, and is one of the main local taxes in Portugal. This tax must be paid by all property owners, whether individuals or companies, and the amount to be paid depends on the type of property, its location, and the taxable property value assigned by the Tax Authority. Changes to the IMI Payment Deadline Normally, the IMI payment deadline is 31st May. However, due to technical difficulties accessing the Tax Authority portal, caused by a widespread power failure that affected the Iberian Peninsula at the end of April, the Government decided to extend the deadline to 30th June. This measure applies to all taxpayers, ensuring they have additional time to settle their IMI-related tax obligations. The Tax Authority informed that the system failure prevented the timely sending of IMI payment notices to a considerable number of taxpayers. As a result, the deadline extension was implemented to mitigate the impact on taxpayers and ensure everyone has enough time to make the payment. Impact of the Power Outage on Tax Compliance The power outage on 28th April severely affected the Tax Authority’s IT systems, interrupting the electricity supply for around 10 to 11 hours, which hindered the normal operation of tax portals and made it difficult to meet various tax obligations. In addition to IMI, other tax obligations, such as VAT and Corporate Tax (IRC) returns, were also affected, leading to the need for deadline extensions to ensure compliance. Additionally, the Government decided to extend the deadline for submitting the IRS Model 22 tax return (for IRC) to 16th June, a decision that followed complaints from the Order of Certified Accountants (OCC), which reported persistent issues with the Tax Authority portal. How to Make IMI Payment To pay IMI, taxpayers must access the Tax Authority portal, where they can consult the payment notices and make the payment, either by bank transfer, ATM, or other authorised methods. It is important to verify that all data is correct before making the payment to avoid errors that could lead to penalties or interest. If taxpayers encounter difficulties accessing the Tax Authority portal or have not received the payment notice, they are advised to contact the Tax Authority to resolve the situation as soon as possible, avoiding delays in payment. What to Do if You Can’t Pay IMI on Time? If taxpayers are unable to pay the IMI within the specified deadline, there are options such as requesting a payment plan in instalments or using other methods to regularise the debt. However, it is crucial that the payment is made within the deadline to avoid interest on arrears or other penalties. Other Tax Measures Related to the Power Outage In addition to extending the IMI payment deadline, the Government also took measures to alleviate the impact of the power outage on businesses and accountants. The deadline for submitting VAT returns, both for monthly and quarterly taxpayers, was extended to 26th May, allowing VAT payments to be made by 30th May without additional charges or penalties. These measures aim to ensure that the technical difficulties caused by the power outage do not hinder tax compliance and that businesses, in particular, can meet their obligations within a reasonable time frame, given the impact on IT systems. The extension of the IMI payment deadline to 30th June provides relief for taxpayers who were affected by the issues with the Tax Authority portal due to the power outage. Although the original deadline was 31st May, the deadline extension ensures that all taxpayers can fulfil their tax obligations without any setbacks, ensuring the smooth continuation of the IMI payment process. Taxpayers are encouraged to take advantage of this additional time to settle their tax obligations and avoid any potential complications.
Source: Adobe Stock Author: Redaction 1) What is IMI? 2) What is VPT? 3) How to obtain IMI payment details 4) How many instalments should I pay? 5) Are you overpaying IMI? Heres how to check 6) Simulate before requesting a revaluation 7) Consequences of not paying IMI on time 8) Best practices for managing IMI What is IMI? The Municipal Property Tax (IMI) is one of the most important tax obligations for property owners in Portugal. Every year, property owners must pay this tax, which is calculated based on the tax asset value (VPT) of the property. Payment can be made in one, two, or three instalments, depending on the amount owed. In 2025, the deadline for paying the first IMI instalment is 31 May. What is VPT? The Tax Asset Value (VPT) is the value assigned by the Tax Authority to properties for tax purposes, such as calculating the IMI. This value is determined using a formula that considers factors like the propertys area, location, construction quality, and age. Although the VPT does not reflect the market value, it serves as the basis for tax calculation and can be adjusted if the owner requests a new valuation from the Tax Authority. If you havent received your IMI bill, youre still obligated to pay. The absence of this document, whether due to an incorrect address or email delivery issues, does not invalidate the tax obligation. Fortunately, you can obtain all the necessary payment details via the Tax Authoritys online Portal. How to obtain IMI payment details To check your payment notice online, follow these steps: Visit the Tax Authority Portal. Log in with your NIF and access password. Select Services > Municipal Property Tax (IMI). Click on Consult Payment Notices. Choose the year of payment, in this case, 2024. This will show the Multibanco reference, the amount to be paid, and the respective deadlines. With this information, you can make the payment via online banking, ATM, or at the bank counter. How many instalments should I pay? The number of IMI instalments depends on the total amount to be paid: Less than 100 euros: single payment in May. Between 100 and 500 euros: two instalments (May and November). Over 500 euros: three instalments (May, August, and November). These deadlines are fixed and apply to all taxpayers, regardless of whether they receive the payment notice by post. Are you overpaying IMI? Heres how to check If you suspect the IMI amount is too high, you might be overpaying. IMI is calculated based on a formula that includes various coefficients, such as location, property type, area, age, and construction quality. Not all of these coefficients are updated automatically. One example is the obsolescence coefficient, which represents the propertys age. This is only updated if the owner requests a new valuation from the Tax Authority. This means that a property more than two years old could still be taxed as if it were new if it hasn’t been revalued. This can result in an outdated and inflated tax asset value (VPT). For instance, imagine a newly purchased home three years ago. If it hasnt been revalued, it still has an obsolescence coefficient of 1. After revaluation, this could drop to 0.9, reflecting the loss of value over time. This small difference could lead to significant savings on the IMI. Simulate before requesting a revaluation Before proceeding with a revaluation request, it’s essential to simulate the impact of this change. There are online simulators that can help you determine whether updating the coefficients will lead to a reduction or an increase in the tax. This is because all coefficients, including the price per square metre of housing, which has risen considerably in the past two years, will be reviewed by the Tax Authority. In some cases, the IMI amount may even increase after the revaluation. If the simulation indicates potential savings, you can submit IMI Model 1 on the Tax Authority Portal by 31 December. The new valuation will apply to the tax due in the following year. Consequences of not paying IMI on time Failing to pay IMI on time results in late payment interest and can trigger fiscal enforcement processes, with penalties and additional costs. To avoid these situations, make sure to check the data on the Tax Authority Portal and meet the deadlines, even if you don’t receive the payment notice by post. Best practices for managing IMI Check your registered email and address with the Tax Authority to ensure you receive tax communications. Mark the IMI deadlines in your calendar: May (always), August and November (if applicable). Simulate possible savings on IMI with a revaluation of the VPT. Keep payment receipts and update property details whenever necessary. IMI is an annual tax that all property owners must pay, but there are ways to manage and even reduce this burden. If you havent received your payment notice, you can and should obtain the details from the Tax Authority Portal. If you think you’re paying too much, simulate the impact of a revaluation and see if it’s worth it. With information and planning, its possible to meet the tax obligation and still save on IMI.
Source: Adobe Stock Author: Redaction The growing difficulty young people face when purchasing their first home has led to the introduction of support measures by the Portuguese government, such as the exemption from IMT (Property Transfer Tax) and the provision of public guarantees enabling 100% financing. However, an alternative with similar characteristics has been left out of these incentives: real estate leasing. Despite its potential to facilitate young peoples entry into the real estate market, this option continues to be overlooked in public policies. While traditional mortgage loans require a significant down payment and often depend on challenging bank approval criteria, real estate leasing can offer 100% financing without the need for an initial deposit. For young people, who often lack savings, this could be the key to home-ownership. However, this solution remains highly limited in Portugal, both in terms of availability and the associated tax burden. What is Real Estate Leasing? Real estate leasing is a contract in which a financial institution acquires a property and rents it to a customer in exchange for rental payments. At the end of the contract, the customer can choose to purchase the property. This model is widely used in Europe, both in the corporate sector and the private housing market. However, in Portugal, it is still seen almost exclusively as a business tool, with limited use among individuals, particularly young people. Currently, among the main banks, only Caixa Geral de Depósitos offers a real estate leasing solution for housing. This allows for full financing of the home purchase, with no down payment, a clear advantage over traditional mortgage requirements. Nevertheless, this product is poorly promoted and almost unknown to most young people looking for a home. Tax Barriers Stifle Growth Despite its clear advantages, real estate leasing is subject to several tax penalties that make it less competitive. According to the Portuguese Association of Leasing, Factoring, and Renting (ALF), this model is subject to the highest IMT tax rates, is affected by the Additional IMI (Property Tax), and does not benefit from the IMI exemptions usually granted to primary residences. This situation is even more unfair when considering that young people under 35 are already exempt from IMT and Stamp Duty when purchasing their first home. However, these exemptions do not apply if the purchase is made through real estate leasing, creating a clear disincentive to using this alternative. Furthermore, the AIMI, which targets high-value property, cannot be passed on to the lessee, even though they are the user of the property, increasing costs for the bank and making the solution less viable. ALF Advocates for the Removal of Barriers to Real Estate Leasing ALF has been alerting the government to these tax discriminations and has already proposed, within the framework of the 2025 State Budget, the removal of IMI, AIMI, and IMT penalties to allow individuals, especially young people, to use leasing as a legitimate and accessible way to acquire home-ownership. The association argues that real estate leasing should be included in the support offered to young people, just as other financing solutions are. Luís Augusto, president of ALF, emphasizes that due to its characteristics, leasing significantly reduces the risk for both the financial institution and the consumer, offering a realistic option for those who do not have immediate access to traditional bank credit. This model, for example, is widely used by non-resident tax payers, demonstrating its viability when framed within a more favourable tax regime. Data Reinforces the Need for Change According to ALF data, in 2023, 428 real estate leasing contracts for housing were signed, totalling €205 million, a 7% decrease from 2022. The average value per contract was €480,000, a slight increase from the previous year. These figures highlight not only the lack of interest from operators in promoting the product, but also its poor penetration in the private sector due to existing legal and tax barriers. A Path to Explore to Facilitate Access to Housing In a context where housing has become one of the greatest challenges for Portuguese youth, ignoring real estate leasing is to waste a solution with significant potential. Including it in public policies supporting youth housing would diversify funding sources, reduce obstacles to home-ownership, and make the system fairer and more inclusive. For this to happen, it is essential that the government recognizes real estate leasing as a valid option for young people and removes the tax discriminations that prevent it from being competitive. Just like public guarantee-backed loans, leasing can and should be part of the national strategy to ensure access to housing, especially for those taking their first steps into adulthood.
Source: Adobe Stock Author: Redaction The Additional to Municipal Property Tax (AIMI) is a supplementary tax to IMI that applies to the total Taxable Asset Value (VPT) of residential properties and land for construction. This tax is applicable to individuals, legal entities, and undivided estates that, as of 1 January of the tax year, own urban properties intended for housing or land for construction. Since its introduction, AIMI has become part of the Portuguese tax system, aiming to increase taxation on high-value real estate assets. Its application is based on the combined VPT of all properties subject to this tax, excluding those used for commercial, industrial, or service activities. For individuals, there is an automatic exemption on the first €600,000 of VPT. In the case of married couples opting for joint taxation, the exemption increases to €1.2 million. This measure seeks to lessen the fiscal burden on families who own significant assets but do not fall into high-income brackets. However, legal entities such as companies are not entitled to any exemption and are taxed from the first euro of taxable asset value. A key aspect of AIMI concerns undivided estates, that is, inherited assets that have not yet been divided among the heirs and are jointly owned without specific shares assigned to each heir. When properties are registered under an undivided estate and the heirs fail to act within the established deadlines, the Tax Authority treats the estate as a legal entity for tax assessment purposes. This can result in a higher tax burden, as the estate loses the individual exemption of €600,000 and is taxed from the first euro, as if it were a company. To avoid this, heirs must comply with two key deadlines. The first was on 31 March, by which the head of the estate (the person managing the inheritance) had to inform the Tax Authority how the AIMI liability should be divided among the heirs. This communication defines the ideal share distribution of the estate with regard to properties subject to AIMI. The second deadline is 30 April. By this date, each heir must submit an individual declaration via the Tax Portal confirming the shares indicated by the head of the estate. This confirmation is essential to prevent the estate from being treated as a legal entity for tax purposes. Failure to confirm these shares results in the loss of the €600,000 exemption per heir and may lead to higher taxation. Heirs must submit this declaration electronically, logging in with their Tax Portal credentials. Once logged in, they should select the AIMI section and the functionality for confirming shares in undivided estates. The process is simple but must be done carefully to ensure the reported shares accurately reflect the actual division of the estate. AIMI is paid annually in September, based on the ownership and taxable value of properties as of 1 January of that year. This means that all communications and confirmations completed by 30 April directly affect the amount payable for that tax year. It is also important to note that properties exempt from or not subject to IMI in the previous year are excluded from AIMI. This applies, for instance, to properties classified as cultural heritage or used for permanent residential letting, provided they meet the legal exemption requirements. AIMI also has differentiated tax rates. For individuals, the rate is 0.7% on the taxable value exceeding the €600,000 exemption. For legal entities and undivided estates not disaggregated, the base rate is 0.4%. An increased rate of 1% applies to the portion exceeding €2 million per holder in the case of very high-value estates. For heirs, it is essential to ensure full compliance with AIMI-related tax obligations. Timely confirmation of shares in undivided estates not only enables exemption eligibility but also ensures fair individual taxation, avoiding unnecessary additional charges. Careful fiscal management of inheritances is, therefore, crucial to minimise the impact of the tax and avoid unpleasant surprises during AIMI’s annual settlement.
Source: Adobe Stock Author: Redaction When selling property, capital gains taxation is one of the key financial concerns for homeowners. One effective strategy to lower the taxable amount is to deduct renovation expenses, provided they are directly linked to property value enhancement and were incurred within the last 12 years. Tax regulations require that these costs be considered integral to the property and contribute significantly to its improvement. To qualify for a deduction in the capital gains calculation, the homeowner must retain all supporting documentation proving the works were carried out. This includes detailed invoices, receipts, and quotes specifying the services provided and materials purchased. The documentation must demonstrate that the expenses were directly tied to renovation works that increased the property’s value. Simply purchasing materials without carrying out actual renovations does not allow for deduction. Eligible renovation works include flooring replacement, plumbing installation or upgrades, kitchen modernisation, electrical system improvements, and other enhancements that increase the property’s worth. Energy efficiency improvements, such as modern climate control systems and thermal insulation, as well as external renovations like façade maintenance, can also be deducted, provided they contribute to the property’s overall value. The deductibility of these expenses is particularly relevant for properties that are not the owner’s primary residence. In such cases, capital gains tax is applied more rigorously, meaning that reducing the taxable amount can lead to significant savings. Therefore, careful planning and proper documentation are crucial to ensuring renovation expenses are recognised and deducted in the capital gains calculation. Applying this deduction mechanism correctly requires a thorough review of all renovation work undertaken. Property owners must ensure that each expense is clearly documented and directly linked to value enhancement. A lack of sufficient proof may result in tax authorities rejecting the deductions, increasing the taxable amount. In Portugal’s real estate market, where property appreciation remains a major driver of investment, the ability to deduct renovation costs plays a strategic role. It enables owners to maximise financial returns on property sales while promoting property rehabilitation and modernisation. In a constantly evolving economic landscape, the deduction of renovation expenses fosters a more competitive and dynamic environment, benefiting both investors and the real estate sector as a whole. Beyond direct tax benefits, meticulous record-keeping of renovation work can also be advantageous for overall property asset management. Proper preparation for a property sale, backed by comprehensive documentation, not only facilitates tax deductions but also enhances transparency and credibility in the market. This approach allows property owners to streamline transactions and minimise capital gains tax liabilities. Deducting renovation expenses is an essential tool for property owners looking to reduce tax burdens when selling their assets. By investing in value-adding improvements and maintaining detailed records, taxpayers can significantly offset costs in capital gains calculations. This practice supports sound financial management while encouraging urban regeneration and modernisation, contributing to a more dynamic and sustainable property market.
Source: Adobe Stock Author: Redaction In recent years, several measures have been implemented with a significant impact on various areas, particularly in housing, healthcare, and the social sector. With the recent end of this government, it is essential to recall some of these actions and their effects. In a scenario of instability and constant restructuring, the focus has been on creating favourable conditions for home-ownership while improving essential healthcare services. The implementation of these policies reflects a strategy to strengthen citizens and investors confidence, consolidating a foundation that could drive urban modernization and social well-being. Housing Measures Among the initiatives in the housing sector, tax incentives and public guarantees to facilitate financing for first homes stand out. Young people up to 35 years old benefit from tax exemptions, including on IMT (property transfer tax) and Stamp Duty, significantly reducing the costs associated with purchasing property. In addition to tax benefits, the government implemented a state guarantee covering a percentage of the transaction value, enabling banks to finance up to 100% of the propertys price. These measures aim to promote access to housing, encouraging young people to enter the real estate market and stimulating the sector, even during periods of greater caution from investors. Financing Programs and Direct Support Complementing the incentives, financing programs with more advantageous conditions tailored to the reality of new buyers were launched. These programs offer extended terms and competitive interest rates, making it easier to acquire a first home. The state guarantee reduces the risk for financial institutions, allowing for a greater supply of mortgage credit and, consequently, easier access to home-ownership. These initiatives are crucial for encouraging investment in the real estate sector and supporting the building of personal wealth, contributing to a more inclusive society. Healthcare Initiatives In the same spirit of modernization and service improvement, the government also implemented measures in the healthcare sector. An emergency plan was launched to reduce waiting times for consultations and procedures, ensuring that citizens have quicker access to essential care. Internal restructuring measures led to the renewal of positions and the reorganization of services, aiming to make hospital and emergency services management more efficient. Although some episodes have highlighted operational challenges, these initiatives represent an effort to transform healthcare services and align government priorities with citizens needs. The modernization of healthcare services, accompanied by investments in infrastructure and human resources qualification, aims to create a trustworthy environment that benefits society as a whole. Public-Private Partnerships and Urban Revitalization Another strategy adopted by the government is to promote partnerships between the public and private sectors for the rehabilitation and modernization of urban areas. These collaborations aim to transform degraded areas into dynamic and attractive zones, improving not only the quality of life for residents but also encouraging investment in the real estate sector. Urban revitalization includes building rehabilitation projects, modernization of infrastructures, and the creation of community spaces that revitalize neighbourhoods. This set of initiatives reinforces the idea that, even in a challenging political scenario, there are opportunities to promote sustainable and inclusive development. In an environment of political instability, the government has focused on measures that encompass both housing support and healthcare improvement. Tax incentives, public guarantees, and financing programs have facilitated young peoples access to home-ownership, while healthcare initiatives aim to ensure a more efficient and modern public service. The emphasis on partnerships and urban revitalization completes this picture, creating a scenario where, despite the challenges, there are opportunities to transform the housing landscape and promote citizens well-being. The continuity and effectiveness of these policies will be crucial in consolidating a more stable and prosperous future, where the government plays a central role in promoting social and economic development.
Source: Adobe Stock Author: Redaction In a year marked by local elections, we have seen a significant increase in the number of municipalities that decided to extend the IMI exemption. The measure, which initially allowed for a three-year tax-free period, has been extended to five years in 59 municipalities, reflecting a 195% increase compared to 2024. The information was published by the Tax and Customs Authority (AT), as stipulated in the 2025 State Budget (OE2025). The districts of Faro and Leiria lead the list of municipalities that have adopted this tax benefit extension. In these areas, property owners who acquired a primary residence between 2020 and 2022 will be able to benefit from the IMI exemption for two additional years, provided the property’s taxable value does not exceed 125,000 euros. For the first time, the Madeira and Azores archipelagos are also included in the list of municipalities that have implemented this measure. Who is eligible for this extended exemption? To benefit from the extended IMI exemption, property owners must meet several essential requirements : The property must be a primary residence. The taxable value of the property cannot exceed 125,000 euros. The gross annual income of the household must not exceed 153,000 euros. The property must have been acquired between 2020 and 2022. These criteria follow the same logic as the standard three-year exemption but allow for an additional two-year tax-free period in the municipalities that have opted for this extension. Impact of the measure in different municipalities The extension of the IMI exemption comes as a response to rising interest rates and the economic crisis impact on Portuguese families. In 2024, only 20 municipalities had approved this support. However, with the arrival of 2025, the number of municipalities tripled, now covering 59 municipalities. Lisbon and Porto, despite being cities with the highest real estate pressure, remain outside the list. However, there has been significant growth in the adoption of this measure by other district capitals. Braga and Castelo Branco have joined Leiria in offering this benefit. On the other hand, Santarém, which was part of the group in 2024, has decided not to continue applying the measure. Which municipalities by district? Braga : Vila Verde, Celorico de Basto, Cabeceiras de Basto, Braga Bragança : Vinhais, Vimioso, Mirandela, Macedo de Cavaleiros Porto : Santo Tirso, Paços de Ferreira Vila Real : Sabrosa, Valpaços, Chaves Castelo Branco : Vila de Rei, Oleiros, Castelo Branco Aveiro : Sever do Vouga, Oliveira do Bairro, Castelo de Paiva Guarda : Vila Nova de Foz Côa, Figueira de Castelo Rodrigo Coimbra : Soure, Coimbra Viseu : Lamego, Sernancelhe, Penalva do Castelo Leiria : Alvaiázere, Pombal, Bombarral, Batalha, Porto de Mós Santarém : Almeirim, Ourém, Santarém, Torres Novas Lisbon : Mafra, Alenquer, Cadaval Setúbal : Moita Évora : Vila Viçosa, Reguengos de Monsaraz, Estremoz, Arraiolos Beja : Ferreira do Alentejo Faro : Silves, Portimão, Lagos, Lagoa, Castro Marim Ponta Delgada : Lagoa Funchal : Santa Cruz, Funchal, Santana How is the exemption period calculated? The initial three-year IMI exemption period is counted from the year the property was acquired. For example: If the property was purchased in 2020, the exemption would apply until 2022. With the new measure, the property owner can benefit from the exemption until 2026, provided their municipality approved the extension. For properties purchased in 2022, the initial exemption covers 2022, 2023, and 2024. With the extension, the tax benefit will also apply in 2025 and 2026, meaning the IMI payment will start in 2027. In addition to primary residences, properties acquired for rental purposes are also eligible, provided the contracts are for permanent housing and comply with the income limits defined in the legislation. What might happen in the coming years? As local elections approach, it is possible that more municipalities will opt to adopt this measure, making the extended IMI exemption a reality for more Portuguese citizens. However, each local government has the autonomy to decide whether to propose the measure to the municipal assembly, which has the final say on the approval or rejection of the tax benefit. If you want to know whether your municipality has adopted this extended IMI exemption, you can check the list published on the Tax Portal. The measure could represent significant savings for families and investors in the real estate market, becoming a decisive factor in the choice of where to buy a home in the coming years.
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