IMI - the four routes to exemption
1. Permanent exemption - low-income households
Granted for life and renewed automatically every year by the Tax Authority, with no application needed. It applies when, cumulatively:
- The household's gross annual income does not exceed €17,295.59 (2.3 times 14 IAS, in 2026);
- The total VPT of all the household's properties does not exceed €75,198.20 (10 times 14 IAS, in 2026);
- The property is the household's own permanent home.
2. Temporary exemption - purchase or completion of works on your own home
It lasts 3 years, extendable to up to 5 years depending on the city council's decision, and can be used at most twice by the same household over a lifetime. Conditions:
- Property VPT up to €125,000;
- Household taxable income up to €153,300;
- Change of tax address to the property within 6 months of the purchase or completion of the works;
- Application to the Tax Authority within 60 days after that deadline, with no debts to the Tax Authority or Social Security.
3. Exemption for properties renovated in an ARU
A 3-year exemption from the year the works are completed, renewable for a further 5 years on application and by decision of the municipal assembly. It requires an improvement of at least 2 levels in the property's state of conservation (to "good" or higher) and compliance with energy-efficiency requirements. It applies to properties intended as a permanent own home or for residential rental.
4. Exemption for moderate-rent lettings
New in the 2026 Housing Tax Package: properties let with rent up to €2,300/month (the same conditions explained in the article on rental taxation) are fully exempt from IMI for the first 8 years, moving to a 50% reduction from the 9th year.
A property let at a moderate rent can combine an IMI exemption, a 10% IRS rate and, if it is in an ARU, 6% VAT on works - three separate benefits at the same time.
IMT - the three routes to exemption
| Regime | Full exemption up to | Partial exemption up to |
|---|---|---|
| General, permanent own home | €106,346 | Progressive brackets above this value |
| Youth IMT (≤35 years old, first home) | €330,539 | Up to €660,982, with a marginal rate of 8% on the excess |
| Renovation in an ARU | No value limit | Full exemption on the first transfer of the renovated building |
Youth IMT: the requirements not shown in the table
Besides the value limit, Youth IMT requires the buyer to be 35 or younger on the date of the deed, not to be considered a dependant for IRS purposes, and not to have owned (or co-owned) a home in the previous three years. The exemption also covers Stamp Duty and registration fees, and can apply to only half of the purchase if only one of the buyers meets the requirements.
Renovation in an ARU: exemption with no value cap
Unlike the other two regimes, the IMT exemption for buildings renovated in an ARU does not depend on the property's value - it applies to the first transfer for consideration after the renovation, provided the property is intended as a permanent own home or for residential rental, and that the renovation has been certified by the city council on the same terms required for the IMI exemption.
IMI and IMT exemptions on renovated properties are not automatic: they depend on the developer having strictly followed the entire process required by the council. This includes an inspection before the works start, to establish the initial state of conservation; approval of the project, which must be followed to the letter - with no discrepancy on site compared with what was approved, down to the materials of the window frames, the grilles concealing the air conditioning or the colour of the façade; and a final inspection by the council, specifically for the purpose of granting the benefit. Any deviation from the approved project, however small, can put the future owners' right to the exemption at risk.
Note for non-resident buyers
The 2026 Housing Tax Package introduced a flat IMT rate of 7.5% for purchases by non-residents, regardless of the property's value - replacing, in these cases, the normal progressive brackets. It is worth simulating both scenarios before closing a purchase through a corporate structure or as a non-resident individual.