The primary concern of most prospective property buyers is to know the total cost that their purchase will involve.

A fairly comprehensive description of all the purchase related costs follows:

WHAT ARE THE COSTS INVOLVED?

The costs at the time of purchase are the following:

• IMT - Municipal Transfer Tax (purchase tax);
• Title Transfer (Escritura) fees and Stamp Duty;
• Property Registration Fee;
• Lawyer's fee.

The ongoing or future costs involved are basically:

• IMI - Municipal Annual Rates on the property;
• Inheritance Tax.

IMT - Municipal Tax on transfer of property ownership
The Municipal Tax on transfer of the rights to a property (IMT) is basically a purchase tax, payable by the purchaser when a property's rights change ownership. The rates applicable are the following:

• 1% to 6% for urban property for residential use (Houses & apartments). The rate is calculated using a sliding scale which changes periodically, and the table below gives the current formula for calculating the IMT tax.
• 5% for rural (rustic) property.
• 6.5% for urban properties not destined for residential use such as office spaces and other commercial property.
• 6.5% for urban land plot for construction.

Payment of the IMT tax is due prior to the Escritura and the proof of payment must be presented to the Notary before the Escritura can be completed.

Title Transfer (Escritura) Fees and Stamp Duty
These are the fees payable at the Public Notary for drawing up and witnessing the signing of the Escritura (Title Transfer), and are due on the date of the signing. The total fee is made up of two parts, namely the actual Notary fee, and a Stamp Duty on the transaction.

There are also some small extra costs related to the number of copies of the document you request, etc.

• Stamp Duty on purchase: 0.8% of purchase price.
• Extras usually do not exceed €100.
• The Notary Fee itself is made up of a base fee depending on the property value, a supplement for each property transacted and the cost of the certificate of the Escritura. All these values are subject to IVA (VAT). The list below gives the total of these three components, including IVA, for the respective price ranges:

Property Registration Fee
The final step in the procedure is to register the purchase with the Property Registry Office (Conservatória do Registo Predial) of the area in which the property is located, and at the Tax Office (Repartição de Finanças).

The costs are as follows:

• Registration of purchase is a fixed value of €125.
• Registration of mortgage is a fixed value of €135 (only if you are buying with a mortgage).
• Extras usually do not exceed €100.

Lawyer's Fee
These fees vary according to the value and complexity of the transaction. While the actual amount will depend on the lawyer chosen and the buyer's direct negotiation, experience has shown that the figure of 1% of the purchase price is a good benchmark for initial calculation purposes.

IMI - Municipal Annual Rates on the property
The IMI is an annual tax on a property.
On the 5th December 2008, a new decree law was approved (Decreto Lei nr. 64/2008) defining new IMI rates and years of exemption from payment.
The new IMI rates, applied to the Taxable Asset Value of the property, are as follows:

• 0.8% for rural properties;
• 0.2 to 0.4% for urban properties (Houses, apartments, offices and commercial spaces) when the Taxable Asset Value has been updated according to the new rules;
• 0.4 to 0.7% for urban properties which have not yet been re-evaluated in accordance with the new rules;

The IMI calculation is based on the property values up to the 31^st December of each year, and is due at the end of April of the following year. If the amount exceeds €250 it may be paid in two installments the second at the end of September.

When an urban property is used as a permanent and personal residence you will be Tax exempt as follows:

Inheritance Tax

An inheritance or gift between husband and wife, and between parents, children, or other ascending or descending relatives, is exempt of tax; if the inheritance or gift is not between ascendant or descendant relatives, the transfer is subject to stamp duty.

• While we have made every effort to ensure that the information presented is accurate and complete, we do not guarantee its accuracy, this information has been offered for reference purposes only and you should confirm all this information prior to purchase with your lawyer.

Example 2:
For a property priced at € 190.000,00 :

IMT Formula: (Price x 5%) - €5.464,00
IMT:  (€190.000,00 x 5%)  - €5.464,00€

        (€9.500,00) - €5.464,00

IMT Tax payable = €4.036,00

Costs payable:
Purchase Tax (IMT)     :  € 4.036,00
Notary Fee                   :  €    211,74
Stamp Duty                  :  € 1.520,00
Registration Fee           : €    125,00
Lawyer's Fee (approx. : € 1.900,00
Extras (approx.            : €    200,00

ESTIMATED TOTAL        : € 7.992,74
% OF PRICE                  :         4.21 %

NOTE: THESE ARE APPROXIMATE VALUES FOR INFORMATION PURPOSES ONLY. THE FINAL TOTALS MAY VARY.  THE AMOUNTS CALCULATED ARE FOR STANDARD PURCHASES ONLY (WITH NO MORTGAGE INVOLVED)