10 questions about the IMI

10 questions about the IMI

The first installments of the IMI are starting to arrive in the post boxes this march. For many taxpayers, 2015 will be a year where many owners will have to pay more IMI tax. The reason: the end of the safeguard clause, which was used over the last two years, to soften the disproportionate rise in IMI, after the revaluation of properties that took place between 2011 and 2012.

However, despite this bad news, there will be more households exempt from paying this tax. This is because the maximum gross household income for the purposes of the exemption, will rise and from 2015 will cover families with annual incomes up to 15 295 euros per year, provided that the book value of the property does not exceed 66,500 euros. It’s estimated that the number of families eligible for the full exemption from payment of IMI is extended to more than 50 thousand families, passing in 2015 the 350,000 households.


  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.


  1. 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 2014, you will pay the IMI for the full year. Likewise, if you sold your property at the beginning of 2015, you will still need to pay the IMI this year, as it’s always related to the previous year.


  1. 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, comfort and property age, updated every three years.

  1. 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.


  1. Who determines the IMI rates?

The municipalities decide each year, which tax to apply in their council. This needs to be between 0.3 and 0.5% 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.


  1. How long is the payment of 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 can pay in two installments, in April and November. If the amount exceeds 500 euros, you can pay in three times (April, July and November).


  1. 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.


  1. Where can the IMI be paid?

IMI can be paid at the Tax Office, Post Office, in any ATM machine or through internet banking.


  1. Who is entitled to exemption?

Are exempt from property tax, the owners whose annual income on IRS in the previous year does not exceed 15 295 euros, provided that the book value of the property does not exceed 66,500 euros. The exemption is recognized by the head of the local tax office for a period of three years.


  1. I am paying too much IMI, can I reduce my IMI bill?

It may be possible to revaluate 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 the IMI property tax bills. However please note that any reassessment only takes effects on the following year, as you will only pay IMI for 2015, in 2016.

If you wish to find out whether your property may qualify for a tax discount, please feel free to contact us!