IMI for families with children can help families save money. Learn about this tax benefit, see if it applies to you, and calculate how much money you can save.
Since 2016, households with children have been eligible for a Municipal Property Tax reduction (IMI). The so-called family IMI is a fixed deduction from the tax due that changes based on the number of children the family is responsible for.
The municipalities are in charge of allocating this tax advantage, and they can choose whether or not to use it. According to figures provided by the Ministry of Finance, the number of municipalities that elected to offer this discount this year increased to 264, an increase of 11 from the previous year.
Find out if you are eligible for this IMI reduction and what requirements you need to meet.
What is family IMI?
Family IMI is a tax advantage for families with children who are under the age of 18. This is a fixed deduction from the tax due, which changes depending on the number of dependents in the home.
Number of dependentes Fixed deduction
1 20€
2 40€
3 or more 70€
Terms and Conditions for getting the discount.
Families must have dependent children who are under the age of 25 and have no income in order to qualify for this IMI discount.
There are three other general criteria:
• the property must be owned by the families concerned;
• the property must be utilized for own and permanent housing; and
• the property must be identified as the family's tax address, with the address being recorded in the Finances for tax and notification purposes.
Who decides the assignment of family IMI?
Even if you meet all of the requirements, you may not be eligible for a discount on IMI. This is because it is up to the municipality in which the property is located to decide whether or not to ascribe this tax benefit, which must be informed to the Tax and Customs Authority (AT) by December 31 of the tax year in question.
The municipality may alternatively choose to apply this reduction just to families with a specified number of children, such as only benefiting households with three or more dependents.
How to calculate IMI with the discount in place?
Family IMI is calculated as a fixed deduction that, as previously stated, changes based on the number of dependents.
Thus, the discount attributed by the municipality to the household must be subtracted from the amount of tax payable (determined by multiplying the municipality's IMI rate by the Tax Asset Value of the Property).
The following is the formula to use:
• DISCOUNTED IMI = IMI x VPT Rate - Fixed Deduction per household (FAMILY IMI)
Consider the following scenario:
The accounts for a family with three dependents who own a property worth 100,000€ and live in a municipality that has opted to charge an IMI tax of 0.3 percent are as follows:
• DISCOUNTED IMI = 0.3% x 100,000€ - 70€ = 230€
This family will pay 230€ in IMI instead of 300€ if the municipality did not provide this tax break.
The IMI rate used in your county can be found in the table at the end of this blog. The Tax Asset Value of the property can be found in the Caderneta Predial (available on the Finance Portal).
Do I need to apply?
No. The Tax Authority will automatically apply the discount based on the information it has.
The property matrices, as well as data on the composition of the household (age of dependents and tax address) collected through the IRS's yearly declaration, are used for this purpose.
Which Municipalities have joined the family IMI?
According to the Ministry of Finance, 264 municipalities declared their desire to allocate this IMI reduction to families with children in declarations for the tax for 2021 (which begins to be paid next May 2022).
According to the Portuguese Association of Large Families (APFN), this tax cut will be implemented in 253 municipalities by 2022. (for 2021).
To find out if your municipality offers this discount (and how many children it applies to), go to the Finance Portal and look up IMI rates. After selecting the year and district, click "+info" in the "Fixed deduction per aggregate" column. The next screen displays whether the discount has been applied (or not), as well as which aggregates are covered (depending on the number of dependents).
This information is also available here.
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