40
40

Stamp Tax on Housing Sales Added an Additional €50 Million to State’s Coffers in One Year

18 August 2018

Revenues from Portugal’s stamp duty on real estate acquisitions have accompanied the boom in the property market, rising 29% in 2017.

The tax implications of Portugal’s real estate market boom are not solely reflected in the increasing receipts coming from the Municipal Real Estate Transfer Tax (IMT). A good part of the additional revenues is coming from the less well-known stamp duty, which, last year alone, added 231.4 million euros to the state’s coffers, €50 million more than the previous year.

Lacking any exemptions, the government charges the stamp duty whenever properties are acquired. The rate is currently fixed at 0.8%, based on the value of the transaction or the property’s taxable value (VPT), ​​whichever is greater.

Forecasts point to new highs for housing transactions in 2018

Data provided by the Tax and Customs Authority, which break down revenues from the various types of operations that are liable for the stamp duty, show that the share of receipts stemming from the acquisition of real estate increased by 29% from 2016 to 2017. It was the highest year-on-year increase in the last five years, which have grown by double digits since 2014.

The 231.4 million euros raised last year (revenue which goes to the central government, unlike the IMT, which goes to individual municipalities) reflect the 153,292 housing sales in 2017, up 20.6% compared to 2016. That number, reported by the National Statistical Institute, was well above the high of 129,950 in 2010.

Recent market trends also favourably influenced revenues from the stamp duty. According to the INE, the average price per square meter of the homes sold in 2017 stood at 932 euros, rising by 7.6 % over the previous year, well above inflation, whose rise was limited to 1.4%.

Although the most recent survey of the residential real estate market, conducted by Confidencial Imobiliário and the Royal Institution of Chartered Surveyors, noted a relative slowdown in sales and demand for homes over the current summer season, forecasts point to new highs regarding transactions, and taxes, in 2018.

According to calculations by the Association of Real Estate Companies and Professionals (APEMIP), the number of home sales is expected to reach 165,000 to 175,000 by the end of the year. Data regarding the IMT for the year to date show that the tax generated receipts of €485 million in the first half of 2018, compared to €415.8 million in the same period last year.

Last year, the IMT (which, like the stamp tax, is levied on the value of the sale or the VPT) yielded 851 million euros, surpassing the record €839 million seen in 2010.

The stamp tax on leases and subleases also registered the highest growth in the last five years in 2017, reaching 11.5 million euros, an increase of 9.8%.

Original Story: Diário de Notícias

Photo: João Carlos Santos

Translation: Richard Turner