IMI is the municipal property tax in Portugal, charged annually on every property based on its tax-registered value. AIMI is an additional layer that can apply once a single owner’s total Portuguese property value crosses a certain threshold. For non-residents with an Algarve holiday let, both are worth reviewing regularly, especially where properties have been re-evaluated over time.
This is not tax advice; the rules around residency, ownership structures and exemptions can become nuanced quickly. The points below are intended as a general overview of the areas owners ask about most often.
What IMI Actually Charges
IMI is calculated on the Valor Patrimonial Tributário (VPT) — the tax-registered value of the property — rather than the market value or purchase price. The VPT is set by the Portuguese tax authority (Finanças) and is often below open-market value, although the difference varies significantly by property and municipality.
The annual IMI bill is calculated by multiplying the VPT by the municipal IMI rate.
Municipal IMI rates in the Algarve in 2026 generally sit within a fairly narrow range, although they vary by council and can change annually as local budgets are approved.
- Lagos: 0.30% for urban properties in 2026.
- Loulé and Albufeira: typically around 0.30% to 0.38%, depending on the municipal budget cycle.
- Portimão and Lagoa: generally within a similar range, with year-to-year variation.
- Rural land: taxed separately at a fixed rate of 0.8%, although this classification rarely applies to standard holiday let properties.
A Lagos two-bedroom apartment with a VPT of around €180,000 would produce an annual IMI bill of approximately €540. A four-bedroom villa with a VPT of €420,000 would sit closer to €1,260.
The bill is normally payable in one, two or three instalments depending on the amount due.
When AIMI Becomes Relevant
AIMI is the additional Portuguese property tax applied to higher aggregate property holdings.
For individual owners, the first €600,000 of Portuguese property VPT is generally exempt. Married couples or jointly taxed couples may benefit from a combined €1.2 million threshold where the correct election is made.
The key AIMI bands in 2026 are broadly as follows:
- Aggregate VPT below €600,000: generally no AIMI payable for individual owners.
- Aggregate VPT between €600,000 and €1,000,000: 0.7% applies to the amount above €600,000.
- Aggregate VPT between €1,000,000 and €2,000,000: 1% applies to the portion above €1,000,000.
- Aggregate VPT above €2,000,000: 1.5% applies to the portion above €2,000,000.
- Properties held through company structures: AIMI is generally charged at 0.4% on the applicable VPT, without the €600,000 exemption available to individuals.
For many single-property non-resident owners in the Algarve, AIMI does not arise at all. Where it tends to become relevant is where owners hold multiple Portuguese properties, or where VPT re-evaluations over time push the combined taxable value closer to the threshold.
How the Non-Resident Position Differs
The core IMI and AIMI rate structure is broadly the same for residents and non-residents, but some practical points differ.
The areas owners most commonly ask about are tax representation, ownership structures and how the tax authority communicates the bills.
- Non-resident owners may need a Portuguese tax representative depending on their country of residence and notification setup with the Portuguese Tax Authority.
- Holding property through certain offshore or blacklisted jurisdictions can trigger significantly higher tax rates, including punitive IMI treatment of up to 7.5%.
- AIMI assessments are issued directly by the Portuguese Tax Authority, typically during the second half of the year.
- An active Alojamento Local (AL) licence does not itself change the IMI or AIMI position, although it can affect the income tax treatment of the rental activity separately.
Where Owners Most Often Get the Numbers Wrong
Three patterns come up repeatedly with Algarve holiday let owners.
1. The VPT Has Increased Since Purchase
Many owners still budget using the VPT figure from when they originally bought the property, despite later re-evaluations increasing the taxable value substantially.
2. Temporary Exemptions Have Expired
Some owners benefited from temporary IMI exemptions after purchase, particularly on newer properties, and forget to factor in the expiry of those reliefs.
3. AIMI Was Never Considered
Owners who later acquire a second Algarve property often continue budgeting only for standard IMI, without reviewing whether their combined VPT position now creates an AIMI liability.
Summary
IMI is the standard annual Portuguese property tax most non-resident Algarve owners are already familiar with. AIMI is the additional layer that can quietly become relevant once a portfolio grows or taxable property values rise over time.
For many single-property owners, the overall annual position remains manageable. However, owners with multiple Portuguese properties should review their aggregate VPT position periodically, particularly after re-evaluations or new acquisitions.
At Resort Rentals Algarve, we manage Algarve holiday rentals for non-resident owners and can introduce you to Portuguese tax accountants who advise on IMI, AIMI and broader Portuguese property tax matters.
If you would like guidance on the operational side of running your Algarve holiday let, or an introduction to a Portuguese tax professional, please get in touch.
