If you are planning to buy a property, it is crucial to be informed about the taxes you will face and the possible exemptions provided for by law.
Municipal Property Transfer Tax (IMT)
IMT is a one-off tax calculated on the deed value or the property’s Tax Registration Value (VPT), whichever is higher. This tax must be paid before the sale is completed, and proof of payment must be presented when the deed is signed.
Municipal Property Tax (IMI)
IMI rates vary by municipality. Local authorities set the rates applicable to the VPT of urban and rural properties, within the limits set by the Government. For urban properties, rates range from 0.3% to 0.45% (up to 0.5% in exceptional cases) and for rural properties up to 0.8%.
This tax is paid annually. If you buy a property by 31 December, you will have to pay IMI the following year:
- In May, in a single instalment, if the IMI amount is less than €100;
- In two instalments (May and November), if the amount is between €101 and €500;
- In three instalments (May, August and November), if the amount payable is more than €500.
There are certain exemptions from IMI. It is important to know the conditions for benefiting from them.
Additional Municipal Property Tax (AIMI)
Owners of properties with a total VPT above €600,000 are subject to AIMI, a tax on the real estate assets of individuals and companies. This tax applies to residential buildings, building land and undivided estates.
Stamp Duty
Stamp Duty applies to a wide range of acts and contracts. When buying a property, you may have to pay this tax in the following situations:
- Mortgage loan: if you use financing, the tax is paid when the loan is drawn down. The rate varies according to the loan amount and the term of the contract (0.5% for contracts of less than five years and 0.6% for contracts of more than five years).
- Signing the deed: the tax is calculated on the purchase price or the VPT, applying a rate of 0.8% to the higher amount.
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