Real Estate Matters | Land tax & property tax explained

Juliet Risdon

Juliet Risdon is a Director of JML Property and a property investor. 

Having established the company in 1994, JML Property offers Investment Property & Homes. It specializes in managing properties for owners and investors, and providing attractive and comfortable homes for tenants.

Its tax season again, and we always get a lot of puzzled looks when we talk about this subject.

In the following parts of this article we discuss the questions we are most often asked on property and land tax, so let’s take a closer look at the system through some ‘question and answers’

1. What is Land Tax ? (‘Renda’ in Portuguese)

Land Tax is the annual ‘rent’ for the land on which the property stands. It is shared amongst the owners that have a property on that land and is usually a nominal sum. The land tax bill issued this year is for the current year’s tax, and bills are usually issued and payable in May.

2. What is Property Tax ? (‘Contribuicao Predial’ in Portuguese)

Property Tax is the annual tax levied on the actual living space.

If the property is being used as a home, then the tax estimated by the government and based on what they believe to be a fair ‘rental’ rate for the property. If the property is rented out, the tax is calculated as 10% of the rental income for the year or is based on the most recent submitted Rental Agreement. Unlike the land tax, the property tax bill issued this year is for the previous year and bills are usually issued in June, July & August.

3. What is Special Contribution Tax?

This tax is payable when the initial land rental agreement with the government has expired. The government then grants a new land rent with a 10 year term, and the special contribution tax is paid in advance for that 10 year renewal.

4. Who pays the Property Tax?

The tax is payable by the property owner(s). It is treated as a tax on the entity that owns the property.

The tax is usually settled directly by the owner, or by the owners accountant or representative.

JML assist owners to settle these taxes and you are welcome to contact us on the e mail below if you would like assistance.

In order to pay a land tax or property tax if you are not the owner, you must have the original bill.

Alternatively, the government allow a third party to collect the land and property tax bills if they have the details of the property and a copy of the owners ID.

Other owners handle tax payments through their respective accountants.

Only once a property bill becomes ‘late’ can a third party access the bill at the ‘outstanding payment office’, and even then supporting documents are required.

At the outstanding payment office they may only access the bills that are requested, and may not provide details of any other bills still outstanding at the same time.

5. Where is the tax bill sent?

Each person has their own set up.

The tax bill may be sent to them at their own home, or it may go straight to their accountant for example. Some owners send tax bills directly to their accountant or in our case the JML office.

To change the registered address, an owner needs to apply in person.

Tenants are obliged to pass on letters addressed to the owner. However, this is more of an ‘etiquette’ issue, and is difficult to enforce by law.

6. Can Tax bills be checked online?

Yes, now they can.

Owners must first register with the government, and this can only be done in person. Alternatively some banks offer access to tax bills, but it should be noted that you must first have a copy if the bill in hand in order to make payment as you will need to enter details from the bill.

7. I paid property tax this year, why did they not tell me about back taxes?

We can’t answer that question definitively, there may be several reasons.

You have to know the exact bill no and contribution number to be able to check online, and in some cases it seems that the person inputting the data does not see all the outstanding bills, just the bill requested in the system.

There may also be a situation where back tax has not yet been calculated and submitted.

www.JMLProperty.com

info@JMLProperty.com