Law No. 56/2023
After months of anticipation and intense public debate, the decree establishing various measures under the so-called “PACOTE MAIS HABITAÇÃO” was published on 6 October.
With these changes, the authorities aim to address the housing challenges in Portugal.
We highlight some of the fiscal amendments, particularly regarding IMI (Municipal Property Tax), IMT (Property Transfer Tax), and IS (Stamp Duty).
MUNICIPAL PROPERTY TAX (IMI)
Exemptions
A new IMI exemption is introduced for building land intended for residential use in the following cases:
- Land for construction where a prior control procedure for residential building works has been initiated.
- Properties where a prior control procedure for residential use has been submitted to the competent authority but has not yet received a final decision.
Notes:
- If the property is used for a purpose other than originally intended (residential use), the tax will be due for the period since its acquisition.
- This exemption does not apply to buyers who have already benefited from the exemption or to taxpayers domiciled in low-tax jurisdictions as defined by the official Portuguese list, or entities controlled by such taxpayers.
Determination of Taxable Asset Value (VPT)
Municipalities may request that vacant urban properties, which are not autonomous units in a horizontal property regime, as well as derelict urban buildings, be assessed as building land, using the gross areas designated by the municipality.
Increased IMI Tax Rate
An IMI surcharge (up to three times the standard rate) will be applied to rural properties with forested areas that have been abandoned.
However, the additional tax liability resulting from this surcharge must be at least €20 per property.
IMI Deductions
The IMI deduction for properties used as primary residences is increased for taxpayers with dependents.
Properties in High-Demand Urban Areas
A higher IMI rate will apply to:
- Vacant urban properties or autonomous units unoccupied for more than one year.
- Derelict properties.
- Building land designated for residential use, when located in high-demand urban areas.
Additional IMI (AIMI)
The following properties are now exempt from AIMI:
- Urban properties classified as "commercial, industrial, or for services" and "other”.
- Urban properties classified as "residential" under the Rental Support Programme.
Additionally, the €600,000 tax-free allowance on the AIMI taxable value (for individuals or undivided estates) will no longer apply to:
- Vacant properties unoccupied for over a year or derelict buildings, unless their condition is due to natural disasters or calamities.
- Partially vacant properties – in cases where the property is not in a horizontal property regime, the higher tax rate will apply only to the portion of the taxable value corresponding to the vacant parts.
STAMP DUTY (IS)
Stamp Duty exemptions will now apply to:
- Residential rental contracts under the Affordable Rental Programme.
- Contracts concluded under public housing programmes promoted by the competent housing authorities in the autonomous regions.
PROPERTY TRANSFER TAX (IMT)
Regarding IMT exemptions for property purchases for resale, the new law shortens the maximum period allowed between purchase and resale from three years to one year.
Failure to resell within this period will result in:
- IMT becoming due, plus the applicable compensatory interest. Additionally, a change in property use will be considered if:
- Construction work, building improvements, or any modifications lead to a change in the property's taxable value.
