Location coefficient for IMI purposes, how it is calculated »
Municipal Tax and VPT Tax Value

Knowing the Location Coefficient for IMI purposes

The location coefficient, for the purposes of IMI – Municipal Property Tax, is the factor with the most weight in this tax and may increase, following the trend of equating the Tax Asset Value (VPT) with the market value of properties in each area.

As has been happening, the evolution of house prices in Portugal it has been increasing and, therefore, it is necessary to pay some attention so that we can properly plan the amount of IMI that we have to pay.

Estimated reading time: 6 minutes

Property tax

The National Commission for the Evaluation of Urban Buildings (CNAPU) assesses the situation of the real estate market in each area.

And, if deemed necessary, rectify the location coefficients in each Municipality, one of the factors in the Municipal Property Tax calculation algorithm, which is in fact the one that has the greatest weight.

Parameters such as accessibility, public transport, social facilities, complaints from citizens are considered, in addition to what the Municipalities and Finance Services can add in relation to each location, particularly in areas that are under greater real estate pressure.

CNAPU, within its own organization, may propose an increase in location coefficients in order to bring the VPT closer to the market values ​​of properties.

It is therefore necessary for us to be attentive.

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The calculation of the IMI is obtained in this way:

IMI = Municipal IMI Rate x Tax Asset Value (VPT)

IMI Fees in each Municipality

We can find on the Finance Portal the IMI rates, which differ in each District/Municipality.

Fig 1. Municipal Property Tax (IMI), Porto District, 2023. Source Tax Authority
Fig 1. Municipal Property Tax (IMI), Porto District, 2023; Source: Tax Authority

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As an example, a house with a Tax Asset Value of €80.000 in Porto pays Municipal Property Tax, IMI: 0,00324×80.000€=€259,20, annually.

Tax Equity Value - VPT

As for the Tax Asset Value, it is calculated based on the following parameters:

  • Base value of built-up buildings (Vc), equal to the average value set in Ordinance plus 25%
  • Gross construction area to which the surplus area is added (A)
  • Affection coefficient which in the case of housing is 1 (Ca)
  • Location coefficient (Cl)
  • Quality and Comfort Coefficient (Cq)
  • Oldness Coefficient (CV)
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And the formula for calculating the Tax Asset Value is:

VPT = Vc x A x Ca x Cl x Cq x Cv

How to know the Location Coefficient

To find out the location coefficient, you can use the Simulator of the Tax Authority, the SIGIMI.

If the house is located, for example, on Rua de Miguel Bombarda, we must enter the District and Municipality of Porto in the search area and “zoom” until we find the area we want, using the box with the magnifying glass.

Fig 2. To find out the location coefficient for IMI Source AT
Fig 2. To know the building location coefficient; Source: AT

Thus, as an example with a house on Rua de Miguel Bombarda, Porto, with 100m2 of gross construction area (A), the localization coefficient is Cl=1,60.

Using the same values ​​that were calculated and stated in the example for calculate the Tax Asset Value (VPT) and which are Vc=643,75€, Ca=1, Cq=1,13 and Cv=1, the next step is to determine the base value of the buildings constructed (Vc).

The average construction value per square meter, in force each year, is defined by Ordinance. In 2022, the average value was set at €532.

The base value, Vc, is found by adding the average construction value per square meter with the value of the square meter of the implementation land, which corresponds to 25% of the previous one, i.e. €532 + 0,25 x €532 = €665 .

Therefore, the Tax Asset Value, current VPT = (Vc) €665 x (A) 100 m2 x (Ca) 1 x (Cl) 1,60 x (Cq) 1,13 x (Cv) 1 = €120.232.

In summary the VPT/m2 is therefore €1.202,32/m2

Note: For later years, the average construction value per square meter. has to be researched, for example in 2023 the Ordinance is 7A/2023.

The simulator, available on the Tax Authority Portal, shows the details of the calculations and allows you to simulate the value.

Just click on the “housing” indicator arrow.

Fig 3. Tax asset value simulator; Source Tax Authority (AT)
Fig 3. Taxable equity value simulator; Source: Tax Authority (AT)

Then, fill in the data according to the property register and, at the end, the simulator presents the calculation of the Tax Asset Value.

Market Prices

We can follow the examples of the values ​​of real estate market in Portugal available by clicking on the previous link.

Using the values ​​indicated in this article or by directly consulting the INE data mentioned there, we can check whether the values ​​per square meter of the market and the VPT/m2 are above or below.

Estimate of the Construction or Reconstruction Value of the dwelling

We can also calculate the approximate value for housing reconstruction, with identical assumptions, using the simulator of the Portuguese Association of Insurers (APS).

Fig 4 Property reconstruction cost simulator; APS Source
Fig 4. Real estate reconstruction cost simulator; Source: APS

Starting from data entered by the user and relating to the area, quality, location, architecture and other characterizing elements of the property, the simulator calculates a reference value for the reconstruction of the house.

The value is not binding and insurers are not obliged to accept it, but it gives the user an indication that it can be useful.

So what now?

Check the Property Registry for the tax asset value, the date on which the property was assessed by the Tax Authority, the various factors mentioned, namely the location coefficient, and check if you can use the family IMI (Article 112-A of the IMI Code) or if it is justified to request a review of any of these parameters to pay less IMI.

It follows from the Law itself that it can make the reassessment of the tax asset value of the property, every three years.

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