IMT revenue hits record in 2022 and surpasses IMI for the first time

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The revenue generated through the Municipal Transfer Tax (IMT) recorded in 2022 the highest value ever, reaching 1,698 million euros, exceeding for the first time the revenue from the Municipal Property Tax (IMI).

According to the 2022 budget execution data, last year the number and value of property transactions in Portugal increased IMT revenue by 353.2 million euros (+26.3%) compared to 2021.

This is the second largest year-on-year increase in revenue from this tax, only surpassed by the €380.5 million (+39.4%) increase observed between 2020 and 2021 and which reflected some market slowdown in the first year of the covid-19 pandemic.

The 1,698.3 million euros in IMT collected last year represent the largest amount ever generated by this tax (since it replaced the old Sisa at the end of 2003), and it is also the first time that the Municipal Transaction Tax has exceeded IMI revenue.

Unlike IMI, which is levied on the property value of homes and whose revenue has stabilized since 2016 at a level slightly below €1.5 billion, IMT revenue is significantly influenced by the number and value of transactions carried out in the year.

According to the real estate consultants, the year 2022 has seen a strong appreciation, and you have to go back 30 years to find such a high rise.

Data from Confidencial Imobiliário (Ci), recently released indicate that the sale prices of houses in Portugal (Mainland) rose 18.7% in 2022, this being “the highest annual appreciation of the last 30 years”. That is, you have to go back to 1991 to find a year-on-year rate of change at the end of the year higher than the one recorded this past December.

Ci points out, however, that despite this strong appreciation, the year 2022 was not all the same, having evolved at two paces: until July, the Residential Price Index showed a strong acceleration, “with successive average monthly increases of almost 2.0%”. The second half of the year, on the other hand, “was of loss of intensity, with a cooling of the monthly variations” which, twice, were lower than 1.0%.

Data from the consultancy firm JLL indicate, for its part, that in 2022 transactions in the Portuguese real estate market will exceed 34 billion euros, up 14% over 2021. Of that amount, about 31 billion euros refer to residential real estate and about 3,300 million to commercial real estate.

JLL also points to 168,000 residential properties being transacted by 2022.

This market dynamic had a direct translation on IMT’s revenue.

IMT is levied on the purchase and sale of real estate, regardless of whether it is new or used.

IMT is also due when there is a property exchange, grant of usufruct, or assignment of the buyer’s contractual position.

The rules for this tax state that it is calculated on the amount of the transaction or the taxable value (VPT) of the property, whichever is greater.

There is an IMT exemption when the house is for one’s own permanent residence, applicable up to 97,064 euros (value in force in 2023 after the 4% update foreseen in the State Budget for 2023), with marginal rates applied above this value.

IMT and IMI are revenue of the municipalities, but are collected by the Autoridade Tributária e Aduaneira (AT).

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