What is IMT and how is it calculated

Who pays, when, and why it can stop the deed

IMT is the buyer's tax. Even if the parties agree that someone else will bear the cost, the taxpayer as far as the tax authority is concerned is the person acquiring the property.\n\nIt is paid before the deed, not after. Whoever executes the deed will ask for proof of assessment and payment and will not proceed without it. In practice this means having the IMT available in cash in the week of the deed. A mortgage finances a percentage of the property value, not the taxes on the purchase.\n\nStamp duty on the transfer is paid alongside IMT. If there is a mortgage, there is also stamp duty on the amount borrowed and on the charge over the property. These are separate items, all payable by the buyer, and all outside the loan.

What the tax applies to: price or rateable value

IMT does not necessarily apply to the price you paid. It applies to the higher of two values: the price stated in the contract and the property's rateable value.\n\nThe VPT is the fiscal value assigned by the tax authority and appears on the caderneta predial. In most transactions it is below market price and the tax is calculated on the price. But in properties revalued recently, or bought below market, the VPT can be the higher of the two. In that case you pay tax on a figure that is not the one leaving your account.\n\nAsk for the caderneta predial before you agree a price, not after. It is the document that carries this number, and it is what lets you do the real arithmetic while there is still room to negotiate.

How the band calculation works

The IMT table is progressive, like income tax. There is no single rate applied to the whole amount. The value is split into bands, each band has its rate, and the calculation is done in shorthand: the marginal rate of the band the property falls into is applied to the full value, then a deductible portion is subtracted, which corrects exactly the excess charged on the lower bands. That is why crossing into a higher band does not make the tax jump abruptly.\n\nThere is more than one table. Permanent own residence carries lower rates than secondary housing, which is the case for anyone buying to let or buying a second home. Building land and non-residential urban property are taxed at a flat rate, not by bands. Rural property has its own rate. There is an aggravated flat rate for acquisitions by entities based in jurisdictions with a clearly more favourable tax regime. The Azores and Madeira have their own tables.\n\nThe figures for each band change with the state budget. There is no point memorising them or copying them from an article, including this one. The official simulator applies the table in force on the day you use it, and that is the only version that matters for budgeting.

Exemptions and reductions exist, with conditions attached

A permanent own residence below the first band pays no IMT. That is the natural effect of a progressive table whose first band is taxed at zero, not a relief you have to apply for.\n\nThere is also an exemption regime for young buyers acquiring a first permanent own residence, with an age limit, a ceiling on the property value, and the condition of not owning and never having owned another home. Above the ceiling the relief may be partial. There are further reliefs linked to urban rehabilitation and affordable letting, with their own rules and, in some cases, a municipal decision involved.\n\nThe part that catches people out is lapse. An exemption granted on the basis of permanent own residence falls away if the property stops serving that purpose within the period set in law, for example if it is let or resold. The tax then becomes due, with interest. Before assuming you are exempt, confirm the exact condition with the tax authority or with whoever is handling the deed, and confirm it in writing.

How it is actually paid

The assessment is made on the Portal das Finanças or in person at a tax office. You complete the Modelo 1 IMT declaration with details of the property, the parties and the transaction, and the system issues a payment document.\n\nPayment is by bank reference or over the counter, and the receipt goes to the deed. The assessment is made for that specific transaction with those specific details: if the price changes, if the buyer changes, or if the deed is delayed, it has to be redone.\n\nIf the transaction never reaches the deed, IMT already paid is refundable on application to the tax authority, within the legal deadline. It does not come back on its own and there is no reminder.

Where the arithmetic usually goes wrong

The most common mistake is budgeting for the price alone. IMT, stamp duty and the costs of the deed and registration are added to it and all leave your account in cash, in the same month. The second most common is assuming the permanent own residence table when the property will be a second home or will be let. The difference in tax is material and tends to surface late.\n\nThe third is ignoring the VPT and doing the sums on the agreed price only. Reading the caderneta predial early avoids the surprise of a tax calculated on a figure higher than what you are paying.\n\nThe fourth is subtle and the most expensive. IMT can become due before the deed in situations involving a promissory contract with the property handed over to the buyer, an assignment of contractual position, or a clause allowing a third party to be named as buyer. If any of these is on the table, it is something to settle while the CPCV is being negotiated, not the night before the notary.

Where to check the figures

• Portal das Finanças: simulador de IMT e entrega da declaração Modelo 1
• Diário da República: Código do IMT, texto consolidado
• Autoridade Tributária e Aduaneira: informação fiscal e e-balcão

We do not publish tax tables or percentages: they change with each state budget, and an out-of-date number on an agency's own site is a problem rather than a typo. The sources above carry the current value.