Buying, owning and selling a home in Portugal involves three different taxes at different moments. Confusing them or leaving them out of the sums is common — and expensive.
IMT: paid at purchase
The municipal transfer tax (IMT) is paid by the buyer, before the deed, and depends on the purchase value, the purpose of the property (permanent or secondary residence) and its nature. It is accompanied by Stamp Duty on the purchase and, when there is a loan, on the borrowed amount. It is the tax most often forgotten in "how much can I spend" simulations.
IMI: paid every year
The municipal property tax (IMI) is levied on the taxable value (VPT) — not the market value — and is charged by the council every year. There are temporary exemptions for permanent own homes within certain values and for lower-income households, but they must be applied for. An outdated fiscal assessment can mean an unfairly high IMI: the owner may request a VPT review.
Capital gains: assessed at sale
Anyone selling at a profit may have to tax the gain — the difference between the sale value and the purchase value, less documented costs (works, agency fees, purchase taxes). When selling a permanent own home there are reinvestment rules that may reduce or remove the tax, with their own deadlines and conditions. The concrete rules depend on each taxpayer's situation and change with the State Budget: always confirm with an accountant before selling.
What is worth keeping
- The deed and purchase documents, with the value and taxes paid.
- Invoices for works identifying the property (they count towards the gain).
- The caderneta predial and IMI notices.
- Agency contracts and proof of costs.
Points of attention
- Simulate the IMT before fixing the purchase budget.
- Check eligibility for the IMI exemption.
- Before selling, work out the likely capital gain with a professional.
- Confirm reinvestment deadlines, if applicable.