There is nothing like being well-informed and knowing what taxes to pay when buying a house, what future taxes to pay for the fact of assuming the condition of owner and what tax benefits can come from it.
Buying a house has a romantic side that, for many, is a dream come true, but which can be a nightmare, in fiscal and financial matters.
When someone chooses to buy a house based on the advertised sale price, few are able to immediately estimate the final value of the house, considering all the associated financial and tax burdens.
Thus, nothing like being informed and knowing everything related to the tax impact of buying a home.
I'm going to buy a house, what taxes do I have to pay?
In addition to the costs related to the Deed and the Provisional Registration, the buyer will have to pay a set of taxes on the purchase of a property, at the time of the deed:
IMT - Municipal Tax on Onerous Transfers of Real Estate
This is - as the name implies - a one-time city tax paid before the official sale of the house. Don't forget to pay it off before the date set for the deed. This is because for the realization of the same, the notary requires proof of payment of this tax. The buyer of the property is responsible for paying the IMT.
a) How is the IMT calculated?
To find out the amount related to this tax, you must know the Taxable Asset Value and the value declared in the purchase and sale agreement. A rate is applied to the greater of these two values, which is established annually in the State Budget. This fee varies depending on the location and purpose of the property in question.
The highest rate to be applied at the moment is 10%, applied in cases of acquisition of urban or rural buildings, whose new owner is resident in a tax haven. For residents of Portugal, the rate can reach 6.5%. You can find out how this tax works in this article.
b) Exemption from IMT
The exemption from payment of IMT is valid for properties whose purpose is own and permanent housing and whose value of the VPT or purchase and sale price (greater of the two) is equal to or less than 92,407 euros, in mainland Portugal. The reference value for exemption rises to 115,508.75 euros, when the property is located on the islands of the Azores or Madeira.
In Doctor Finance's IMT simulator, calculate the amount you will pay in IMT for the purchase of your new home.
IS - Stamp Tax
In addition to the aforementioned taxes, the buyer will have to assume the costs related to the Deed and the Provisional Registration, and in case the purchase of the property is financed with a credit , he will have to pay:
- bank commissions;
- Stamp tax;
- Mutual registration with mortgage;
- Multi-risk Life Insurance.
I bought a house and now, what tax obligations await me?
The IMI - Municipal Property Tax is the tax that stands out the most and that any owner (provided that the property is not covered by some type of exemption), will have to pay annually, as long as he is the owner of that property.
I applied for a loan from the bank to buy a house, do I have any tax benefits?
In the past, there were some tax incentives for those who buy their own home using credit. Recent changes have reduced this type of incentives, know the current tax framework with regard to this matter.
- Deduction of amounts paid, with regard to interest, on the purchase or construction of a house for own and permanent housing (only valid for contracts concluded until 12/31/2011). In other words, when contracting a credit for the purchase of own housing, you will be obliged to pay a monthly installment. This installment is broken down into several installments: amortization of the credit granted, interest on the loan, taxes, insurance and commissions payable to the bank that granted the credit. On the interest component and only on this installment, there may be a deduction in terms of your IRS, provided that the contract has been granted by December 2011.
- Exemption from payment of Stamp Duty on interest on loans granted for the acquisition, construction, reconstruction or improvement of Permanent Own Housing, regardless of the Credit Scheme. That is, you are exempt from paying stamp duty on the interest portion , included in the monthly installment of your loan ( Law No. 150/99 ).