MONEY MATTERS

Each month, Ricardo Chaves of All Finance Matters will answer readers’questions to help you to understand the often complex tax system here

I have not received my IMI (Municipal Property Tax) council bill yet – do I need to do anything? From this year the dates to make the payment of the IMI have changed. Previously payable annually in April, the first installment is now payable in May. The payment due dates depend on the amount of the IMI you pay each year: • Amount equal to or less than ¤100 - in a single installment during May • Value between ¤100 and ¤500 inclusive - in two installments during May and November • Value over ¤500 - in three installments payable in May, August and November

Please note that if you wish, you can always pay the full amount in May.

If you do not receive the IMI council tax bill, it may be because your address in Portugal is incorrectly listed. If you are non-resident you should rectify this and provide the address of a fiscal representative or your own address outside Portugal. This common mistake leads the tax authorities to assume you are resident, and therefore have an obligation to submit an IRS tax declaration.

However, if you are classed as a resident and did not submit a tax declaration last year, that may be the reason why you did not receive notification of IMI council tax this year, which may generate problems at a later stage. Please contact us for advice, to rectify the situation.

I need to file my IRS tax declaration this year. Do I need to declare my foreign bank accounts? Do I need to declare my electronic credit card? This is not new; all resident taxpayers are obliged to mention in their Personal Income Tax (IRS) any accounts opened outside the Portuguese territory. As regards the type of accounts to be declared, the law expressly refers to “deposit or securities accounts” and therefore accounts of another nature, such as non-payment or electronic payment cards, don’t need to be declared.

If you are resident and do not declare your accounts outside Portugal and this is detected by the tax authorities, they may increase the period of expiration of your IRS to 12 years.

This means that if your IRS is audited for any reason and any irregularity is detected, the tax authorities can only go back four years. However, if they detect that you did not disclose the foreign bank accounts, the law offers an exception to the tax authorities to go back 12 years, instead of four.

We sold our property for ¤250,000 in 2018. This was our primary residency and would like to reinvest the proceedings of the sale into another property. The new property will cost ¤150,000, plus another ¤100,000 in refurbishment works; can I use this as part of the reinvestment?

You have up to three years after the sale to make the reinvestment in another property that you chose as your new primary habitation. This property can be located anywhere within the EU. If the new house you purchased has a price of ¤250,000, then you avoid the payment of Capital Gains Tax. However, if the property is worth ¤150,000 and you are going to spend a further ¤100,000 refurbishing your new home, then you will be faced with paying Capital Gains Tax, as the costs for the refurbishments will only be used when you sell the new property that you now purchased.

There is one alternative and that is if you were to buy a plot of land for ¤150,000 and build a new property for ¤100,000. In this case the reinvestment would be fulfilled. However, if the property you are buying already existed, then the tax authorities will not accept the refurbishment costs as part of the reinvestment.

Please note that in any case, all invoices for the refurbishment or construction should have your Fiscal Number (NIF) and include the address of the property. Also, if the property has more than one owner, please ask the builder to invoice both owners for 50% each. This avoids any future confusing situation in a gain situation, as only one owner can deduct expenses. If you are buying an existing property, the tax authorities will not accept the refurbishment costs as part of the reinvestment of the sale of your previous property

Over the past few months we have received many questions from Simply Algarve readers, and although some of them are related to specific individual situations, the advice given will, hopefully, help all readers get a better understanding of the tax system in Portugal.

Whatever your tax concerns, please feel free to contact us with your questions – we are here to help at any time. Just email ricardo@allfinance.pt – the letters of most general interest will be published in the first available issue of Simply Algarve magazine.

Ancora Steakhouse & Portuguese food

Open 3.30pm to midnight Rua da Botelha Edificio delta Marina 13 Vilamoura Quarteira 8125-448 Reservations: 912 765 275

ANCORA

AF_Medusis_Outdoor_8x3.pdf 1 19/02/2019 16:19

Opening hours:

May: Thursday - Sunday 15:00Pm - 24:00Am June to September - Everyday 10:00Am - 2:00Am

A vida é uma festa. Celebre-a. Crie um evento inesquecível. Life is a party. Celebrate it. Create an unforgettable event. A vida é uma festa. Celebre-a. Crie um evento inesquecível. Life is a party. Celebrate it. Create an unforgettable event.

Portugal Solicitors