Rates - IMI - Local Government Taxes

Rates, Council Tax or what we call IMI

How much is it? How is it calculated? When is it paid? Let’s find out.

The term IMI stands for Imposto Municipal sobre Imóveis and is the cost you are charged each year for rates. It's the payment to the local government for the various services and costs such as rubbish collection, street repairs, street lighting etc.

IMI is usually paid in three parts per year if it is above 500 euros in total, in arrears (May, August and November). The time when the bills are calculated is at the end of the year - December, for that year. It is not instantaneous on the change of ownership. This system sometimes confuses owners as if you were to purchase a property in January you don't receive a bill from the taxman for more than 12 months. Most often the parties agree a pro-rata payment (between them) to ensure the new owner and the previous owner split the bill fairly as the system is unable to do so automatically.

IMI is calculated differently depending on where the property is located and in which local council. The well-known councils, in the Algarve, are Faro, Loulé, Albufeira, Lagos, Tavira and Portimão. 

The charge is calculated on the Patrimonial Value (PV) of the property. Not the real worth. The PV is often a lot less than the real value (maybe a third) and can be found on the Caderneta Predial - which is the tax record from the tax office. 

The amount you have to pay is calculated by charging a percentage. For privately owned Urban properties (which the majority of clients purchase) you are charged between 0.3% and 0.45%. The amount is set by the local government. At the time of writing this article you can see the variations below for urban properties:

Rates for 2022

Faro Council currently charges 0.35% 

Loulé Council currently charges 0.3% 

Albufeira Council currently charges 0.30% 

Lagos Council currently charges 0.32% 

Tavira Council currently charges 0.34% 

Portimão Council currently charges 0.42% 

Here are some examples using the PV (based on 0.3%):

€200,000 = €600 per annum

€300,000 = €900 per annum

€400,000 = €1200 per annum

Purely as a guide, and it varies on each property, if we take a view that the PV is indeed a third of the value of the property then:

Actual Value - €600,000 = €600 per annum

Actual Value - €900,000 = €900 per annum

Actual Value - €1,200,000 = €1200 per annum

Remember this is for indication purposes only.

AIMI

It is also necessary to be aware of an additional IMI tax if you hold properties (privately owned) above a total PV of €600,000. This is called the AIMI. If properties are jointly owned then this threshold applies to a single party. Hence, if it is joint ownership and they have joint taxation then they have a threshold of €600,000 each and their properties can add up to a PV €1,200,000 before AIMI applies.

The amount of AIMI charged (on the basis you are above the threshold) is:

From €600,000 to €1m you pay 0.7% on the value above €600,000.

From €1m up to €2m you pay 1% on the value above €1m.

From €2m and upwards it is 1.5% on the value above €2m.

Summary 

The above information is based on private ownership. Corporate ownership differs and we recommend you contact us if you require more information on how the IMI is calculated.

As with all legal and taxation matters we recommend you seek expert advice and while we have tried our best to explain the IMI, we cannot be held liable for any actions taken on the above information.