Learn how IMT and Stamp Duty work, when they are paid, how they are calculated and in which situations you may qualify for an exemption.
Source: Adobe Stock
Author: Redaction
What are IMT and Stamp Duty?
When buying a home, in addition to the property price and the deposit for a mortgage, it is essential to take into account the mandatory taxes associated with the deed. The main ones are IMT and Stamp Duty, which form part of the total cost of the purchase.
IMT is payable whenever ownership of a property is transferred through a sale, while Stamp Duty applies to the purchase and, where financing is involved, also to the amount of the mortgage loan. Understanding these obligations helps you plan your budget and avoid unexpected expenses.
How are these taxes calculated?
IMT is calculated based on the higher of the purchase price or the property's Taxable Asset Value (VPT). The applicable rate varies according to the property's location, its intended use and the type of property, with tax brackets updated annually.
Stamp Duty on the purchase is charged at a rate of 0.8% on the higher of the purchase price or the VPT. If you take out a mortgage, an additional Stamp Duty of 0.6% is charged on the loan amount for contracts with terms longer than five years.
Are there IMT exemptions?
In certain situations, the law provides for an IMT exemption. One of the most common applies to the purchase of a primary residence, provided the property's value falls within the legal thresholds in force.
There may also be tax benefits for properties intended for urban regeneration within Urban Rehabilitation Areas (ARU), provided the legal requirements are met. Companies purchasing properties for resale may also benefit from specific tax regimes, provided they comply with the applicable rules.
When must these taxes be paid?
IMT and Stamp Duty relating to the purchase must be paid before or on the day of the deed, using the respective payment documents issued through the Portuguese Tax Authority's online portal. Without proof of payment, the deed cannot be completed. In the case of Stamp Duty on a mortgage, the amount is usually collected by the bank when the loan funds are made available. Including these costs in your financial planning is essential to avoid unexpected expenses and ensure a smoother home purchase.
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