Portugal has been a hotspot for workers looking to upgrade their lifestyles. It’s due to Portugal’s slower-paced culture, agreeable weather, and great residency benefits. For that reason, selling properties in Portugal is a profitable investment opportunity. Nevertheless, the tax consequences associated with a property sale can be daunting, particularly in well-developed cities with substantial land values. This article explores the various property sales taxes in Portugal.
What are the property sales taxes in Portugal?
The following are the taxes that property sellers pay in Portugal:
- Capital gains tax
- Notary fees
- Land registry fees
- Broker’s fees
Capital gains tax
The government imposes a capital gains tax (Imposto sobre Mais-Valias) on the profit from selling a property, which you can calculate by the difference between the sale and acquisition costs. The rate of property sales taxes in Portugal depends on residency.
Portugal residents
If you fall under a tax resident in Portugal, only 50% of the profit gained is taxable. The amount would form part of your annual income, which will fall under the following progressive rate.
| Total income | Tax rate |
|---|---|
| Up to €7,479 ($8,152) | 14.5% |
| €7,480 ($8,153) to €11,284 ($12,300) | 23% |
| €11,285 ($12,301) to €15,992 ($17,431) | 26.5% |
| €15,993 ($17,432) to €20,700 ($22,563) | 28.5% |
| €20,701 ($22,564) to €26,355 ($28,727) | 35% |
| €26,356 ($28,728) to €38,632 ($42,109) | 37% |
| €38,633 ($42,110) to €50,483 ($55,026) | 43.5% |
| €50,484 ($55,028) to €78,834 ($85,929) | 45% |
| €78,835 ($85,930) and more | 48% |
When the property is your primary residence, there is an instance where you do not have to pay capital gains. Two reliefs are accessible in this scenario: one for reinvesting the proceeds into a new primary residence and another for investing in a long-term savings plan or pension.
Non-resident
If you are a non-resident, the entire profit is taxable. The rate for non-resident individuals is 28%. Non-resident companies will pay corporate income tax at a rate of 28%. Companies whose residence under countries belonging to blacklisted jurisdictions is liable at 35%.
EU residents
If you are a resident of another EU country or an EEA state with a tax treaty with Portugal, you can choose to enjoy tax laws applicable to Portugal residents. It’s important to note that, in this case, you must declare your worldwide income in Portugal. This option primarily benefits individuals with meager incomes since residents enjoy a 50% cut on their profits from being taxed.
Notary fees
Although notary fees are not property sales taxes in Portugal, they are required fees incurred during property transfers. According to Portuguese law, the transfer of property ownership is finalized through a public deed executed in front of a notary. The amount of notary fees is not standardized and typically varies based on factors such as the notary’s office, the complexity of the transaction, and the property’s value. Depending on the deal, you can agree that the buyer will shoulder this cost.
Land registry fee
Registration of the transfer title is compulsory with the Land Registry office. It helps ensure the contract is respected and protected against third parties. You can register online for a fee of €15 ($16.35) or personally at the land registry office for a fee of €20 ($21.80).
Broker’s commission
Property transactions in a foreign country can be challenging. Therefore, we recommend seeking guidance from professionals such as brokers, realtors, or reputable real estate companies in Portugal. These professionals possess in-depth knowledge of market conditions and negotiation skills, ensuring that you can sell your property with a reasonable profit. Note that most brokers work on a commission basis, typically a percentage of the sale, mostly at 5%, so make sure to factor in their fees when determining your asking price.
Manage property taxes in Portugal with Own Property Abroad
Do you want to buy property in Portugal? Own Property Abroad can assist you and ensure a seamless and hassle-free property journey, whether selling or buying real estate in Portugal. Thanks to our knowledge and experience in the local market, we can help with property taxes, legal requirements, finding suitable properties, negotiating the best deals, and conducting due diligence.
Our team can assist you in understanding which property taxes to pay, preparing tax reports, filing tax returns, and ensuring timely payment of all property taxes. For further information on how we can assist you, kindly drop your details below or email us at [email protected].
Frequently Asked Questions (FAQs)
Do you pay tax on selling a property in Portugal?
Yes, tax is applicable on selling a property in Portugal. Capital gains tax is on the profit made from the sale, with different rates and exemptions available for residents and non-residents.
What is the property sales tax in Portugal?
The property sales tax is IMT or Imposto Municipal Sobre Transacoes Onerosas de Imoveis. The buyer is the one who pays it and can range from 1% to 8% of the property value.
What are the legal fees for property sales in Portugal?
Similar to broker’s fees, the legal costs for a property sale in Portugal can vary depending on several factors, including the complexity of the transaction and the legal professional or firm hired. Generally, legal fees can range from 1% to 2% of the property’s sale price, but it’s advisable to consult a lawyer t for a more accurate estimate.
