One of the key annual obligations for property owners in Portugal is the Imposto Municipal sobre Imóveis (IMI), or Municipal Property Tax. With the May 31st deadline for the first instalment fast approaching in 2025, I wanted to provide a clear and concise guide to help you understand, manage, and potentially even reduce this important tax.
This article will cover:
- What is IMI?
- What is the VPT?
- How to obtain your IMI payment details.
- How many instalments should you pay?
- Are you paying too much IMI? Here’s how to check.
- Simulate before requesting a reevaluation.
- Consequences of not paying IMI on time.
- Good practices for managing your IMI.
What is IMI?
The Imposto Municipal sobre Imóveis (IMI) is an annual municipal tax levied on property in Portugal. If you own a property here in Lagos or anywhere in Portugal, you are required to pay this tax each year. The IMI is calculated based on the Taxable Asset Value (VPT) of your property. Depending on the total amount due, the payment can be made in one, two, or three instalments. For 2025, the deadline for the first IMI instalment is May 31st.
What is the VPT?
The Taxable Asset Value (VPT) is the value attributed to your property by the Portuguese Tax and Customs Authority (Autoridade Tributaˊria e Aduaneira) for tax purposes, including the calculation of the IMI. This value is determined using a specific formula that takes into account various factors such as the size of the property, its location (the “location coefficient” is particularly important here in the Algarve, reflecting the desirability of areas like beachfront or those with excellent amenities), the quality of construction, and the age of the property.
It’s crucial to understand that the VPT does not necessarily correspond to the current market value of your property. However, it serves as the basis for calculating your IMI and other property-related taxes. Importantly, the VPT can be adjusted if the property owner requests a new evaluation from the Finanças (the Portuguese Tax Authority).
Even if you haven’t yet received your IMI payment notice, you are still obligated to pay. The absence of this document, whether due to an incorrect address or an email delivery failure, does not invalidate your tax liability. Fortunately, it’s straightforward to obtain all the necessary payment information through the Portal das Finanças (the Tax Authority’s online portal).
How to Obtain Your IMI Payment Details
To access your IMI payment notice online, simply follow these steps:
- Go to the Portal das Finanças (https://www.google.com/search?q=https://portaldasfinancas.gov.pt/).
- Log in using your Número de Identificação Fiscal (NIF) and password.
- Select Serviços > Imposto Municipal sobre Imóveis (IMI).
- Click on Consultar Notas de Cobrança (Consult Payment Notices).
- Choose the relevant tax year, which in this case would be 2024 (as the IMI you pay in 2025 is for the 2024 tax year).
- The multibanco (ATM) payment reference, the amount payable, and the respective deadlines will be displayed. With this information, you can make the payment through your online banking, at a multibanco ATM, or at a bank counter.
How Many Instalments Should I Pay?
The number of IMI instalments depends on the total amount you need to pay:
- Less than €100: Single payment in May.
- Between €100 and €500: Two instalments (May and November).
- More than €500: Three instalments (May, August, and November).
These deadlines are fixed for all taxpayers, regardless of whether you receive the payment notice by mail.
Are You Paying Too Much IMI? Here’s How to Check.
Many property owners in the Algarve, particularly international clients who may not be fully aware of the Portuguese tax system’s nuances, might be paying more IMI than necessary. The IMI is calculated using a formula that incorporates several coefficients, including location, property type, size, age, and construction quality. Crucially, not all of these coefficients are updated automatically.
A prime example is the age coefficient (coeficiente de vetustez), which reflects the age of the property. This coefficient is only updated if the owner requests a new evaluation of the property from the Finanças. This means an older property, even one more than two years old, might still be taxed as if it were new if a reevaluation hasn’t been requested. Consequently, the Taxable Asset Value (VPT) could be outdated and inflated.
Imagine a villa you purchased new three years ago here in Lagos. If a reevaluation was never requested, it would still have an age coefficient of 1. If reevaluated, this coefficient could decrease to, say, 0.9, reflecting the natural depreciation in value over time. This seemingly small difference in the coefficient can result in significant savings on your annual IMI payment.
Simulate Before Requesting Reevaluation
Before you proceed with requesting a reevaluation, it is absolutely essential to simulate the potential impact of this change. There are online simulators available (you can often find these by searching for “simulador IMI Portugal”) that can help you understand whether updating the coefficients will lead to a reduction or an increase in your tax. This is because when you request a reevaluation, the Finanças will review all the coefficients, including the per-square-meter price of the property in your area, which has seen considerable increases in the Algarve in recent years. In some cases, the VPT and consequently your IMI could actually increase after a reevaluation.
If the simulation indicates a potential saving, you can submit Modelo 1 of the IMI form on the Portal das Finanças by December 31st of the current year. The new evaluation will then take effect for the IMI payable in the following year.
Consequences of Not Paying IMI on Time
Failing to pay your IMI within the set deadlines will result in late payment interest (juros de mora) and can trigger tax enforcement procedures (processos de execução fiscal), leading to additional penalties and costs. To avoid these unwelcome situations, make sure you check the payment details on the Portal das Finanças and adhere to the deadlines, even if you don’t receive a physical payment notice.
Good Practices for IMI Management
- Verify your email and address registered with Finanças to ensure you receive all tax communications.
- Mark the IMI deadlines on your calendar: May (always), August and November (if applicable based on your total IMI amount).
- Simulate the potential for IMI savings by requesting a reevaluation of your VPT.
- Keep records of your payment confirmations and update your property details with the Finanças whenever necessary (e.g., after renovations that might affect the VPT).
The IMI is an annual tax for all property owners in Portugal, but with the right information and proactive management, it’s possible to not only meet your tax obligations but also potentially reduce your tax burden. If you haven’t received your payment notice, make sure to obtain the details on the Portal das Finanças. If you suspect you might be paying too much, explore the possibility of a reevaluation. By being informed and planning ahead, you can manage your IMI effectively and potentially save money.
For more information on buying or selling property in Lagos and the Western Algarve, or for any questions regarding the Portuguese real estate market, please don’t hesitate to contact me. I’m here to help you every step of the way.
