Deed, IMT and IMI on a new modular house in the Algarve 2026

Direct answer: buying a new modular house in the Algarve involves three main tax blocks. On the land, you pay IMT (Imposto Municipal sobre as Transmissões Onerosas de Imóveis — municipal property transfer tax, 6.5% ~ €3,900 on a €60,000 plot), Stamp Duty of 0.8% and deed+registration (~€1,100). On construction, VAT of 23% is already included in the Ecoimport turnkey price. Annually, you pay IMI (Imposto Municipal sobre Imóveis — municipal property tax) at 0.3-0.45% of VPT (Loulé 0.35%, Silves 0.40%), with a 3-year exemption for a first home up to VPT €125,000. A T3 Passive House €315,000 + €60,000 land pays approximately €8,000-10,500 in taxes in the year of purchase and €350-750/year in IMI after any exemption.

Buying land and building a new house in Portugal involves more legal and tax steps than buying an existing house. This guide explains each step, with practical examples for a typical T3 modular home in the Algarve in 2026.

Step 1 — CPCV and land deed

Land purchase begins with a CPCV (Contrato-Promessa de Compra e Venda — promissory purchase contract), a private document binding the parties to the future definitive contract. Essential clauses:

• Identification of buyer and seller.
• Description of the plot (tax reference, area, boundaries).
• Price and payment terms (typical deposit 5-10%).
• Deed deadline (typically 60-120 days).
• Termination conditions: negative PIP, financing not obtained, hidden encumbrances.
• Penalty clause on breach (standard: buyer loses deposit; seller pays double deposit).

The deposit (5-10% of the price) is generally paid on CPCV signing. It is legally forfeited if the buyer fails to close without just cause, or returned double if the seller fails to comply.

After the CPCV, the public deed is executed, a notarial act or via authenticated private document. Cost €200-450 at a public notary, or €400-800 at a solicitor issuing an authenticated private document. Land registration: €375 base.

Step 2 — IMT on the land

IMT (municipal property transfer tax) applies to the purchase of a plot for construction. Rate in 2026 in mainland Portugal: 6.5% in the simplified regime on construction plots, applied to the purchase price or VPT (whichever is higher).

Examples:

• €40,000 plot (interior): IMT = €40,000 × 6.5% = €2,600
• €60,000 plot (interior/typical urban): IMT = €60,000 × 6.5% = €3,900
• €150,000 plot (coastal zone): IMT = €150,000 × 6.5% = €9,750
• €300,000 plot (premium zone): IMT = €300,000 × 6.5% = €19,500

Note: other acquisitions for consideration (e.g. existing housing or land for other purposes) use different brackets. This article focuses on plots for housing construction. Always confirm with the Portal das Finanças (tax portal) or an accountant the applicable regime for your case.

Step 3 — Stamp Duty and registration

Stamp Duty (Imposto do Selo) applies at 0.8% on the land value, cumulative with IMT. In the examples:

• €40,000 plot: Stamp Duty = €320
• €60,000 plot: Stamp Duty = €480
• €150,000 plot: Stamp Duty = €1,200

Land registration: €375 base + variable fees (total €400-500). If bank financing is involved: an extra €200-400 in mortgage stamp duty and mortgage registration.

Step 4 — Construction: VAT on the works

New construction works are subject to VAT at 23% (general rate). In the Ecoimport turnkey price of €315,000 for a T3 180 m², VAT is already included (net €256,098 + VAT €58,902 = €315,000). There is no IMT on the works — IMT applies only to property transmissions, not to a construction service.

Some clients ask whether a reduced VAT rate (6%) applies to refurbishment — it does not apply to new construction. The reduced rate applies to interventions on existing properties in specific regimes (urban works in classified ARU, some works on buildings 30+ years old).

Step 5 — Occupancy licence and VPT

On completing the works, the council issues the occupancy licence (after final inspection). With this, the owner files a declaration with the Tax Authority (AT — IMI Model 1 form) to register the property as urban residential, and the AT calculates the VPT (Tax Patrimonial Value).

VPT formula (CIMI, art. 38):

Vt = Vc × A × Ca × Cl × Cq × Cv

• Vc: base value per m² (€627 in 2026, updated by annual regulation).
• A: gross construction area (counted by levels; for housing, gross above-ground construction area plus ½ of attic/basement areas).
• Ca: allocation coefficient. Housing = 1.
• Cl: location coefficient. Algarve ranges from 1.25 (interior Alcoutim, Aljezur) to 2.50 (Vale do Lobo, Quinta do Lago, Vilamoura).
• Cq: quality and comfort coefficient. New Passive House with Class A and well-sized equipment: 1.05 to 1.15.
• Cv: age coefficient. New = 1. After 15+ years it starts to decrease.

Example T3 Villa Algoz 180 m² in Silves (Cl~1.50): VPT ≈ 627 × 180 × 1 × 1.50 × 1.10 × 1 = €186,219. In Loulé Almancil (Cl~2.20): VPT ≈ 627 × 180 × 1 × 2.20 × 1.10 × 1 = €273,121.

Step 6 — Annual IMI

IMI (municipal property tax) applies annually to VPT. The rate is set by each council within the legal range of 0.3% to 0.45% (urban housing). Typical 2026 rates in the Algarve:

Council rates are reviewed annually. Always confirm on the Portal das Finanças or the council's website.

Annual IMI for a T3 VPT €186,000 in Silves (0.40%): €186,000 × 0.40% = €744/year. In Loulé (0.35%) with VPT €220,000: €220,000 × 0.35% = €770/year.

IMI exemption for a first home

There is a temporary IMI exemption for urban properties designated as own and permanent housing, under the EBF (Statute of Tax Benefits):

• 3 years' exemption if VPT ≤ €125,000 and household taxable income the previous year ≤ €153,300.
• Automatic extension for a further 2 years for low-income cases or large families.

A modular T3 with a typical VPT of €150,000-250,000 exceeds the €125,000 threshold in most cases — full exemption does not apply. However, for smaller T2/T1 homes (VPT €90,000-125,000) and own housing, it applies in full.

Application is made on the Portal das Finanças within 60 days of the AT's notification of registration (IMI Model 1).

AIMI — Additional to IMI

AIMI is an additional rate to IMI, levied on the sum of VPTs of urban residential properties and construction plots held by the same taxpayer, above €600,000.

• 0.7% on VPT €600,001 to €1,000,000.
• 1.0% on VPT €1,000,001 to €2,000,000.
• 1.5% on VPT above €2,000,001.

A modular T3 with a VPT of €150,000-250,000 on its own does not pay AIMI — it is well below the threshold. It only enters the calculation if the owner has other properties whose combined total exceeds €600,000.

Integrated table: how much you pay in the year of purchase

Scenario: T3 Passive House €315,000 (VAT included) + €60,000 land, in Silves.

In subsequent years, annual IMI €700-800 (Silves, 0.40% rate) or €500-700 with partial exemption for a first home. No AIMI. Annual energy consumption €350-700 (Passive House Class A). Total annual operating cost: €1,100-1,500, well below the €3,000-5,000 typical of an equivalent traditional house.

How to declare — IMI Model 1

After the works are complete and the occupancy licence is issued:

1. Log in to the Portal das Finanças with your credentials.
2. Menu Citizens → Services → IMI → IMI Model 1.
3. Fill in with the property's data: gross area, coefficients, declared construction value (for reference).
4. Attach the occupancy licence, as-built drawings and energy certificate.
5. Submit within 30 to 60 days of the issue of the licence.

The AT issues an assessment within 6 months. If you disagree with the VPT, you have 30 days to request a second assessment (with a €700 base cost). A lower second assessment can significantly reduce annual IMI.

Personal income tax deductions related to housing

An own and permanent home in Portugal enjoys some relevant deductions:

• Home-loan interest (contracts before 31/12/2011): 15% of interest paid, up to €296/year.
• Rent or interest (contracts after 2011 under a specific regime): 15% of the amount, up to €502/year.
• Property expenses: costs on urban rehabilitation in classified ARU benefit from deductions under a specific regime.
• Energy certification: some support programmes (Fundo Ambiental, Vale Eficiência) grant direct financial support rather than tax deductions. Check programmes in force in 2026.

Consult an accountant for a detailed calculation for your specific case — personal income tax deductions have bracket limits and complex interactions.

Comparison with buying an existing house

A €22,800 difference in favour of new construction — money that can be applied to improvements, garden, pool or reducing the mortgage.

"The tax regime favours new construction over transfer of an existing property. It is one of the quiet reasons why buying land and building a modular Passive House pays off."

Conclusion

Buying land and building a new modular house in the Algarve involves ~€10,000 in taxes and fees in the year of purchase (IMT 6.5% on land, Stamp Duty 0.8%, deed, municipal fees, connections), against ~€29,000 for an equivalent existing house. The 23% VAT on construction is already in the Ecoimport turnkey price. Annually, IMI runs to €500-800 depending on the council and VPT, with potential partial exemption for a first home. The tax regime is significantly more favourable to new construction, with savings of €20,000+ over buying an equivalent existing house.

Figures, rates and tax regimes are 2026 estimates and vary with annual regulation, council and specific circumstances. Always consult an accountant or the Portal das Finanças for your specific case.

→ Ask us for a quote with a complete tax simulation (48h) or see the investment page for other total costs.