A change to Portugal's property tax laws will see higher 'Imposto Municipal sobre Imóveis' (IMI) demands landing on owners’ door mats this month. The new tax is to be levied on individuals who own multiple properties whose total tax value (valor patrimonial tributário) exceeds €600,000.
The tax office has reported that 211,690 taxpayers will be stumping up more. This number includes both companies and individuals, inherited properties that have yet to be divided up and over 100,000 cases in which the property’s definition is incomplete or out-of-date.
The change to the IMI tax calculation was created to replace the previous system used for ‘luxury buildings’ and by bundling together owners’ properties, the treasury will increase the overall tax take.
The new rates will have to be paid once a year, in September, and an official source at the Ministry of Finance said that 56,412 companies that own real estate will be caught in the net. To this can be added 15,873 individuals with property assets, defined as housing and land for construction, whose value is over €600,000, plus 14 undivided inheritances.
The government estimates that it will be raking in an additional €130 million from the amended tax.
on the plus side, banks will be paying the additional IMI on houses that have been repossessed and construction companies will be paying the new tax on houses that sit on their books.
The president of the Lisbon Association of Owners, Menezes Leitão, pointed out that many landlords will raise rents to cover the costs of the new IMI rates.
The new tax rates do not apply to owners living in offshore tax havens.
The President of the Republic signed an amendment that allows residents of tax havens holding high-value properties in Portugal not to pay the increased IMI rates.
An explanatory memorandum to the law states that, "as in the case of the Municipal Property Tax, persons residing in countries, territories or regions with a clearly more favorable tax regime ... are not subject to the increased rate of IMI."
Companies domiciled in tax havens - offshore companies - are subject to the increased rate on buildings they hold in Portugal, a whopping of 7.5% of the total valor patrimonial.
Many people had thought that they were safe from this tax because they were married and would therefore benefit from a tax exemption of up to €1.2 million - not so, unless ticking the right box beteween April 1 and May 31 to exercise the option of joint taxation, thereby doubling the amount of the exemption.
Only 3,479 couples did this and now are complaining that the Tax Office failed to inform them of the impact of the coming tax change.
