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31, oct 23 | Reading: 9 min.

What is the purpose of IMI in Portugal?

Homeowners are aware that the Property Tax (IMI) needs to be paid annually, with a potential additional payment required in November. As we'll explain in this article, the last instalment of the year doesn't apply to all homeowners. If you're unfamiliar with this scenario, read closely and understand the purpose of IMI.


What is the purpose of IMI in Portugal?


Are you aware of what the Municipal Property Tax on Real Estate, commonly known as IMI, is? What purpose does it serve, how to pay, or when is the appropriate time for it — these questions might arise if you're not familiar with this tax. All these questions will be addressed throughout this article.


What is IMI?


The Municipal Property Tax on Real Estate (IMI) was established in Portugal in 2003 and has undergone several structural changes over time. The revenue generated from this tax, paid by property owners, is directed to the Câmara Municipal, constituting one of the main sources of income for these institutions.


The Government is responsible for annually determining the minimum and maximum values concerning this tax. Meanwhile, the municipalities deliberate on the percentage of the final rate applied to properties and plots, situated within their territory. In 2023, the minimum rate for urban buildings was 0.3%, while the maximum rate was 0.45%, with exceptional cases reaching 0.5% (applied to municipalities participating in local economy support programs or municipal adjustment programs). In all municipalities, rustic buildings have a fixed rate of 0.8%. Each municipality must disclose the rate applied to the Taxable Asset Value by December 31 of each year; otherwise, the minimum rate is automatically applied.


To check the rates applied in each municipality, please check the Portal das Finanças by entering the year and the property location (district). In this IMI dedicated section, you'll find details about deductions for family households. The Family IMI, established in 2015, was designed to ease expenses for families with children.


    • Deductions vary according to the number of children:

    Families with one child receive a discount of €20;

    Families with two children receive a discount of €40;

    Families with three or more children receive a discount of €70.

    • These families must meet the following conditions to qualify for the deductions:

    Be the owner of a property for permanent residence. The property must be registered as the fiscal address of the owner or the family unit in the Tax and Customs Authority (AT).

    Children in the family unit must be under 25 years old and without earnings.


IMI in Portugal 2023

Fotografia de olga-delawrence – Unsplash


When should I pay the IMI?


In May, taxpayers make the first or only payment of the IMI. In the previous month, they received notification by registered mail with the necessary bank references to make the payment.


The deadlines for paying the Property Tax (IMI) vary depending on the amount. In summary, payment can be made once, twice, or thrice, depending on the sum. If the amount is less than €100, the taxpayer must settle the full amount during May. For values above €100 and up to €500, it's possible to pay in two instalments, in May and November. When the amount exceeds €500, the payment can be split into three instalments, in May, August, and the last in November. It's important to note that payments must be made by the last day of each mentioned month.


Property owners with a Taxable Asset Value (VPT) above 600 thousand euros are also subject to the payment of a second tax, the Additional to Municipal Property Tax (AIMI). This is a relatively recent tax that applies to urban buildings and plots for construction.


How is IMI calculated?


Calculating the Municipal Property Tax on Real Estate is quite straightforward: you just need the Taxable Asset Value (VPT) of your property and know the rate adopted in the municipality where the property is situated. To find out the VPT of your property, check the Portal das Finanças. Once you have these two values, multiply the rate by the VPT to obtain the amount to pay.



How does the exemption or reduction of the IMI value work?


Reducing the IMI value – To have the IMI value reduced, it is necessary to request a new property assessment, which may result in a decrease or an increase depending on certain factors. With this assessment carried out by the finance authorities, taxpayers might realize they are paying more in IMI than anticipated. If you suspect being in this situation, you can simulate the Taxable Asset Value (VPT) on the Portal das Finanças to check if it's advantageous to request a reassessment of the IMI. It's essential to remember to request this reassessment only if you're certain you're paying more than you should. If, by chance, the reassessment results in a higher value, you'll end up paying more in IMI. There are online simulators to help determine if you should request a reassessment from the tax authorities.


After confirming the possibility of saving on the IMI, you should request a new assessment by December 31 of each year, with an effect in the following year. You can make this request online or at a Tax Office counter.


IMI Exemption – There are two ways to be exempt from the Municipal Property Tax (IMI). The first is temporary, lasting a maximum of 3 years, applicable when the Taxable Asset Value (VPT) does not exceed €125,000. The household income should not surpass €153,500. The second is a permanent exemption, aimed at low-income families (below €15,295 annually). To qualify for the lifelong exemption from paying IMI, the VPT of the property in question must be equal to or less than €66,500. If the conditions remain the same, the exemption will be automatically granted by the Finanças.


What is the IMI percentage applied to each municipality in the Western Algarve?


  • Aljezur – Aljezur will have the minimum IMI rate, that is, 0.3%. However, the city does not waive the 5% percentage of the IRS, and this amount is not refunded to the citizens.

Discover this 4-bedroom house for sale in Aljezur.

 Villa for sale in Aljezur, Algarve



  • Vila do Bispo – The minimum IMI rate (0.3%) will be applied, but the 5% of IRS will not be refunded.

Check out this house for sale in Vila do Bispo.

 villa for sale in Vila do Bispo, Algarve


  • Lagos – The minimum IMI rate is applied in Lagos, and 1.5% will be refunded to the citizens.

Visit this 4-bedroom house near Porto Mós beach in Lagos.

 villa for sale in Lagos, Algarve


  • Portimão – It has an IMI rate of 0.4%, and the Portimão City Council entirely waives the participation tax, returning the value to the citizens.

We are showcasing this apartment for sale in Portimão with a river view.

 apartment for sale in Portimão, Algarve


  • Monchique – This municipality has the minimum IMI rate (0.3%) and waives half of the participation tax (2.5%).

Discover the properties in the portfolio in the Monchique Mountain range.

 Monchique, algarve

Photo by Lukas – Picjumbo


  • Lagoa – It will have a 0.36% IMI rate and will refund 3% of the IRS participation tax to property owners in Lagoa.

Book your visit to this 5-bedroom house.

 villa for sale in Lagoa, Algarve


  • Silves – This town has the minimum percentage in the IMI rate (0.3%) and does not apply the discount on the participation tax regarding IRS.

Discover a charming house for sale in Silves.

 villa for sale in Silves, Algarve



Certain municipalities in the Algarve region encourage current and prospective property owners to live in this area through specific measures. The cities in the Western Algarve are an excellent example for both taxpayers and property owners. It's an invitation to property owners to increasingly envision their future in this place.