The real estate purchase tax is called IMT (Imposto Municipal Sobre as Transmissões Onerosas de Imóveis) and can be simulate din the section A.
In Section B you can simulate the annual property tax IMI (Imposto Municipal sobre móveis ).
We provided in section C and extensive calculator to simulate a business case for five years for real estate investments.
You can find a guide how to simulate the taxes and the business case below the calculator.
The results are just simulations and should be confirmed by specialized lawyers or tax consultants. The results are merely informative.
Input 1: This is the final price that you pay for the property. If you include other objects like furniture or websites in the purchase, you should get a separate price for them. They are not part of the IMT.
Input 4 and Input 5: The annual tax is a simple multiplication of the taxable property value (Valor Patrimonial Tributário or VPT) and the tax rate . The VPT can be found in the tax registration (Caderneta Predial) of the property. Every real estate broker or private seller needs to have this document. The tax rate for the IMI ranges between 0.3%-0.45% depending on the property's location in Portugal. If you do not now the tax rate we advice to set the value to 0.45%.
Input 6: Renovation cost are not part of the IMT calculation but are relevant for the business case.
Input 7: Long term renting is the normal renting based on a contract. Short term renting is touristic renting (alojamento local).
Input 8: A good located and managed property in Lisbon or Porto should make around 20,000 EUR to 40,000 EUR rental income for short term renting. For long term renting the rent should be 10-14 EUR per square meter or more.
Input 9: The facility management fee are the amounts you pay for janitor or common spaces expanses. A good estimate is 35 EUR per month. This is more applicable to apartments.
Input 10: The renting management fee is the amount you pay to an agency to rent your property. Agencies for long term renting usually charge 30 EUR per month. Agencies for short term renting charge between 20-30% of your turnover.
Input 11: Long term rents can be increased up to 4% per year. Short term rents usually grow between 5-10% in the first years if the property is well managed.
Input 12: The value of real estate has been growing the last years. Moody's Investors Service predicting house price increases of between 7% and 8% every year in 2020. Idealista calculated that the prices on their platform increased 13% in 2019.
Input 13: The tax rate for rental income is currently 28%.
Input 14: If you do touristic renting (alojamento local) the most popular tax option is to declare your income in a simplified manner (regime simplificado). Ths means that you only have to tax a certain percentage of your income. This is currently 35% and in some districts of Porto and Lisbon 50%.
Input 15: A good guess is 10,000 EUR.
Input 16: The additional cost are usually around 100 EUR per month.
Input 17: The current VAT is 23% and is needed for the calculation of the management fee for short term renting.
CAGR (compound annual growth rate) is a standard measure of growth over multiple time periods. It can be thought of as the growth rate that gets you from the initial investment value to the ending investment value if you assume that the investment has been compounding over the time period.
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