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Keep up to date with our Finance expert, chartered accountant Ricardo Chaves from All Finance Matters.

“In this article we will try to clarify some of the questions you may have concerning this property tax.”

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The first installment of the IMI 2017, which is due in April 2018 should have arrived in your post box already. This year the good news is that 15 out of 16 Algarvian municipalities, have maintained or lowered the tax and just Vila do Bispo has decided to increase it. In this article we will try to clarify some of the questions you may have concerning this property tax.


 

1 – What is the IMI?

IMI (Imposto Municipal sobre Imóveis – Municipal Property Tax) is a tax on the taxable value of immovable property in Portugal. This tax came into force in 2003, replacing the Council Tax, and reverts to the respective municipalities.

2 – Who pays IMI?

The taxpayer is the property owner as of 31st December of the previous year. This means that if you bought your property at the end of 2016, you will pay the IMI for the full year. Likewise, if you sold your property at the beginning of 2017, you will still need to pay the IMI this year, as it’s always related to the previous year.

 

3 – How to calculate the IMI?

IMI is calculated based on the Tax Asset Value (VPT) attributed to the property to which is applied a rate set annually by the municipality (VPT x IMI rate). The way the VPT is calculated varies. The VPT is calculated on the basis of various factors such as the construction value per square meter gross floor area, location, quality and comfort and property age, updated every three years.

 

4 – What is the taxable value?

The taxable value of buildings is its value determined by assessment according to the rules of the IMI Code. This value is registered in the land register.

 

5 – Who determines the rates?

The municipalities decide each year, which tax to apply in their council. This needs to be
between 0.3 and 0.45% for buildings and 0.8% for plots (rustic property). Properties with tax
domicile in “offshore”; are taxed at 7.5%, regardless of the type of property.

 

6 – What are the deadlines for the payment of the IMI?

IMI is paid annually through a single billing document in April, if the tax is up to 250 euros. If the value is between 250 and 500 euros, you pay in two installments, 1st in April and 2nd in November. If the amount exceeds 500 euros, you pay in three installments (April, July and November). Please note that if you wish, you can pay the full amount in April, ask us how.

 

7 – What are the consequences of not paying the IMI on time?

If you do not pay within the period specified in the collection document, you will pay interest on arrears. If the non-payment persists your property can be seized.

 

8 – Where can the IMI be paid?

IMI can be paid at the Tax Office, Post Office, at any ATM machine or through internet banking.
If you wish, you can pay it in our office, using a Portuguese debit or credit card.

 

9 – Who is entitled to an IMI exemption?

Owners whose annual income on IRS in the previous year does not exceed 15 295 euros are exempt from property tax, provided that the book value of the property does not exceed 66,500 euros. Also, if you bought your main residence and if the tax value of the property does not exceed 125.000€ and your yearly income does not exceed 153k, you can apply for a 3 year IMI exemption. These exemptions are recognized by the head of the local tax office for a period of three years. Since last year, the fact that the tax payer may have tax debts does not imply the loss of the right to this exemption.

 

10 – Am I entitled to a discount in the IMI due the number of children?

Since 2016 the law considers the possibility of each municipality to offer a family discount based on the number of children in the household. It’s determined by each council and the maximum discounts are: 10%, 15% and 20%, for one, two or three (or more) children.

 

11 – I am paying too much IMI, can I reduce my bill?

It may be possible to re-evaluate your property and reduce your tax liability. We have successfully submitted requests to the local tax departments to reduce the tax values of our clients’ properties, thereby saving many on their IMI property tax bills. However please note that any reassessment only takes effects on the following year, as you will only pay IMI for 2018, in 2019.

12

IMI Rates in the Algarve to pay in 2018, from the lowest to the highest:
0.30% Alcoutim, Albufeira, Castro Marim, Loulé, Monchique and Silves
0.35% Aljezur and Lagos
0.36% Lagoa
0.375% Tavira
0.40% Faro, Olhão and Vila do Bispo
0.42% São Brás de Alportel
0.45% Portimão and Vila Real Sto Antonio

Contact our office and book an appointment to find out more about the tax strategy that might be more effective on your specific situation.

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