The Costs of Holding a Property in Portugal
Looking for a property in Portugal can be fun and exciting. However, after all that excitement and fun fades away, the sobering thoughts around taxes and other property costs might start to sink in. There are lots of sites that can explain this topic way better than I can surrounding the mundane details of transfer taxes, transfer stamps, sales taxes, property taxes, and capital gains taxes, so with this post, I only wanted to point out a few things from our experience with our foreign buyers.
When compared to the many countries and regions around the world that our clients come from, Portugal’s property taxes is among the lowest. The taxes are not based on the property value, it’s based on the “patrimonial value” established with the property, and that ranges from 0.5% to 1.0% of the value depending on where the property is.
There may be exemptions to the property tax (IMI) but will be required before the purchase of the property. Explore these with your lawyer and accountant during the due diligence period to see if you are eligible.
Rental properties are taxed and the rate can vary depending on if you are a foreign tax paying resident or foreign non-resident. The range may be between 14.5% to 28%. Use a tax planning accountant would be our best tip to you.
Utilities can vary based on insulation, windows, roof and also the age of your appliances and power source. Making changes and bettering your energy expenditure is something we can help you navigate when renovating.
Although there’s a tax on the sale of property, IMT tax, there’s also a stamp tax that’s paid by the buyer. This isn’t typical in many countries but is the reality in Portugal.
When it’s time to sell again, don’t forget the capital gains tax. This is calculated based on your residency status and whether it’s your main home or not.
Regarding HOA or property management fees, there are lots of variables to consider. Things like elevators, decor and greenery, amenities onsite, and the age of property would affect the fees. Check out our Tik Tok video for more details.
As we are not lawyers, accountants or financial planners, please review what was shared with your tax team. Our hope is only to give you a bit of a “heads up” on what might be awaiting you after the purchase of a property here and sharing that knowing really is “half the battle”.
Até já,
Mia and Rafael