The fiscal authorities in Portugal have clarified that if a property is registered as Alojamento Local in the 6 years following the purchase, any deduction in the property transfer tax (IMT, or Imposto Municipal sobre as Transmissões Onerosas de Imóveis) when the property was bought is lost, and the amounts deducted have to be paid within 30 days.
This is due to the fact that according to the relevant legislation, such reductions in IMT imply that the property cannot be given a use other than that which gave rise to the grant of the benefit for 6 years after the purchase. This means that if there was any deduction in the IMT tax when a property was bought as a simple residence, and is then transformed, even in part, in to a tourist rental property (Alojamento Local), the tax benefit is lost and any deductions have to be paid back to the state.
This was clarified by the fiscal authorities in a binding ruling (Processo 26681, com despacho de 2024-07-10) in reply to an owner who purchased a property in July 2021 with a deduction in the IMT tax, who later considered implementing Alojamento Local (a hostel) in part of the property, and queried the fiscal authorities about the loss of the tax benefit.
The response of the fiscal authorities leaves no room for doubt: if the taxpayer decides to implement Alojamento Local in a property, or part thereof, acquired exclusively as habitation, in the 6 years following the purchase, the tax benefit is lost and and the amounts deducted must be paid back within 30 days.