The Cascais Letter · Buyer notes

What owning a home in Portugal actually costs: the annual taxes, building charges and owner duties nobody puts in the brochure.

The purchase price is the loudest number in a Portuguese home purchase, and for most buyers it is also the last one anyone explains properly. What follows it is quieter and permanent: two property taxes that run off a tax value most buyers never look at, a council that can multiply your rate if the house sits empty, a building that bills you by law whether you are in it or not, and, if you live abroad, a legal duty to give the tax office a person it can write to. None of it is hidden. All of it is published, in Portuguese, in places buyers rarely reach before they complete. This guide assembles one year of owning, line by line, so the numbers are on the table before the keys are.

Filed under: Buying in Portugal

Two taxes, one number that is not the price

Both of Portugal's annual property taxes, IMI and its top-up, AIMI, are charged on the valor patrimonial tributário, the VPT: the tax value recorded for the property on its caderneta predial, the official property record you can read on the Portal das Finanças. The VPT is not the price you pay. It is produced by a formula (our Portugal property tax guide works through it, including the €570 per square metre construction value the formula uses for 2026), and on older Cascais and Lisbon homes it commonly sits well below the market price. That cuts both ways. Your annual tax bill is smaller than a percentage-of-price guess suggests, but it also means nobody can tell you your bill from the asking price. Ask for the caderneta during due diligence, read the VPT off it, and do the arithmetic below before you sign the promissory contract, not after the first bill arrives. One more date matters: IMI is owed by whoever owns the property on 31 December of the year the tax refers to, while AIMI looks at who owns it on 1 January. Buy in the autumn and the following year's bills are yours from the start.

IMI: the council sets the rate, and Cascais has just raised its own

IMI is the municipal property tax. The law gives every council a band, 0.3 percent to 0.45 percent of the VPT for urban properties, and each council fixes its own rate inside it every year. The bills owners are paying in 2026 use the Cascais rate of 0.35 percent, set by the council in December 2025 and published in its Edital n.º 19/2026, up from 0.33 percent the year before. More than two hundred of Portugal's 308 municipalities charge the 0.3 percent minimum; in the prime Lisbon coast markets, assume you are not in one of them, and check the rate for the specific council in the Portal das Finanças before you budget.

The arithmetic is simple once you have the VPT. On a VPT of €850,000, Cascais IMI at 0.35 percent is €2,975 a year. (Worked example, for illustration: your figure is your own property's VPT times your council's rate.) Payment follows a fixed calendar set by the tax authority: a bill of €100 or less is paid in one go in May; between €100 and €500 it splits across May and November; above €500 it falls in three instalments, May, August and November. You can pay the whole year in May if you prefer one deadline to three. What you cannot do is plead that the letter never arrived: the charge is published on the Portal das Finanças, and chasing it is the owner's job.

AIMI: the second tax, the one that adds up all your houses

AIMI, the adicional ao IMI, is a separate national tax on higher value holdings, and it is the one that surprises foreign buyers, because it does not look at one property at a time. It adds together the VPT of every residential urban property and building plot you own in Portugal, then taxes the total. An individual gets a €600,000 deduction from that total. Above it, the bands are 0.7 percent on the slice up to €1 million, 1 percent on the slice between €1 million and €2 million, and 1.5 percent above €2 million. The tax is assessed in June and paid in a single instalment in September, on its own calendar, separate from IMI.

Run the €850,000 example through it. A single buyer whose Portuguese homes carry a combined VPT of €850,000 pays AIMI of €1,750: 0.7 percent of the €250,000 above the deduction. The same property held at a combined VPT of €1.4 million produces AIMI of €6,800, on top of €4,900 of IMI at the Cascais rate, so €11,700 a year in property taxes alone. (Worked examples, for illustration.) Two structural points follow. First, a married couple or recognised partners who opt for joint AIMI assessment get a €1.2 million deduction and doubled bands, so the €850,000 holding pays no AIMI at all; put a couple's purchase in one name only, without advice, and you can manufacture a tax the law did not require. Second, holding through a company changes the shape entirely: companies pay 0.4 percent on the whole taxable value with no €600,000 deduction, and entities based in a jurisdiction Portugal treats as a clearly more favourable tax regime pay 7.5 percent. How you hold a Portuguese home is a tax decision, and it has to be taken before the deed, not after it.

The empty house penalty, and the discount for a rented one

Cascais's edital is blunt about houses that sit unused, and second home buyers should read it before assuming an empty house is a cheap house. The council triples the IMI rate on urban properties left vacant for more than a year, or in ruins. For vacant properties in designated urban pressure zones, the rate is multiplied by ten. On the €850,000 VPT example, the ordinary €2,975 bill becomes €8,925 at the tripled rate. Degraded buildings, ones whose condition fails their function or endangers people, attract a 30 percent uplift instead. The mirror image also exists: Cascais takes 20 percent off the rate for homes rented out as housing, by application, with applications for the following year's bills due by the end of September. And for buyers who actually move in, the same edital applies the fixed deduction for a household's own permanent home (€30 with one dependant, €70 with two, €140 with three or more) and the statutory IMI exemption for own permanent homes where the household's gross income is no more than €153,300. A house that is lived in, or properly let, is taxed as one thing in Cascais. A house that is simply held is taxed as another.

The building sends its own bill

If the property is an apartment, or a villa inside a condominium development, there is a second payer relationship: the condominium itself. Portuguese law splits the building's charges among owners in proportion to each unit's permilagem, its share of the building's total value, set in the constitutive title. On top of the ordinary charges, every condominium must build a reserve fund, the fundo comum de reserva, and the law fixes the floor: each owner contributes at least 10 percent of their share of the other charges into it, every year, held in a bank account for the building's conservation. Insurance has a legal minimum too. Fire insurance on both the units and the common parts is compulsory by law, and it has to be updated annually; the broader multi-risk policies most buildings carry go beyond the minimum, but the minimum is not optional, and its cost sits inside your charges. Before you complete, ask for two documents: the declaration the seller is required to obtain from the building's administrator, setting out the charges and any debts attached to the unit, which since 2022 has to be presented in the sale process, and the minutes of the last owners' meeting, where a coming lift replacement or roof repair, and the special assessment that pays for it, will be sitting in plain sight. Our condominium costs guide goes deeper on how the charges are built. The buyer's point here is simpler: the building's costs are set by law and by votes you do not control, so read them before they are yours.

If you live abroad, the tax office needs a way to reach you

Everything above assumes the tax authority can find you. For owners who live outside the European Union and the EEA, Portugal does not leave that to chance. The official gov.pt service is explicit: a person with Portuguese tax obligations who lives outside the EU, Norway, Iceland or Liechtenstein must appoint a fiscal representative, an individual or a firm resident in Portugal to whom the tax authority addresses its communications. In most ownership cases the alternative is to sign up for the tax authority's electronic notifications instead, so assessments reach you through the Portal das Finanças; the exception is a VAT registered activity, which still requires a representative. Failing to appoint within the legal deadline carries a fine the official service puts at between €75 and €7,500. Two things a representative is not: they are not liable for your tax, which stays yours, and appointing one does not by itself mean anyone is checking your assessments or diarising your deadlines. Plenty of owners pay for the mailbox and assume the management came with it. It does not, unless you have agreed that separately, in writing. The same care applies to anyone you pay for property services in Portugal: mediation is a licensed activity, and a firm charging for it must hold an AMI licence issued by IMPIC, the sector regulator. Ask for the number. It takes a minute to check, and our buying costs guide explains where the licence fits in the purchase itself.

Three questions to ask before you complete

What is the VPT, and what do IMI and AIMI come to on it, in my name, in our names, and through a company?

The caderneta gives you the VPT in writing. Run it at your council's rate, then run the AIMI bands on the way you intend to hold the property. The difference between the three answers is often the cheapest advice in the whole purchase.

What does the building charge, what is in the reserve fund, and is a special assessment coming?

Ask for the administrator's declaration and the last meeting minutes. A low monthly charge with an empty reserve fund and a failing lift is not a saving; it is a bill that has not been presented yet.

Who receives my tax notices, and who is actually watching the deadlines?

If you live outside the EU or EEA, settle the fiscal representative or the electronic notifications before the deed, and be clear about whether the arrangement is a mailbox or a managed service. The May, August, September and November dates in this article do not move because a letter went to the wrong country.

Sources

Rates and municipal deliberations change annually. Check your council's rate for the current year in the Portal das Finanças, and your own property's VPT on its caderneta predial, before you rely on any worked example here.
Build your buyer briefRead: Portugal's 2026 property tax adjustment

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