The IUP ends: “Welcome” to the ITI and IPI — the new tax reform on real estate in Cape Verde.

Starting January 1, 2026, Cape Verde will begin one of the most significant tax reforms since the late 1990s: the replacement of the Single Property Tax (IUP) with two new codes — the cITI (Property Transfer Tax) and the cIPI (Property Ownership Tax).

The change is not accidental. The country's real estate reality today is substantially different from that of 1998, marked by greater urban dynamism, tourism growth, new developments, and increased property values. The government therefore understood that it was necessary to modernize the tax system applicable to assets. The reform approved in 2025 seeks to bring more tax fairness, greater transparency, and better alignment with the current economic reality.

Why replace the IUP?

The IUP was in effect for over 25 years, but accumulated problems: outdated property values, inadequate rules in the face of market evolution, and little capacity to discourage speculative practices.

With cITI and cIPI, the objective is clear: to make the system simpler, fairer, and more consistent with economic activity, while simultaneously strengthening the financial capacity of municipalities, which will now directly receive the revenue from these taxes.

1. What is the ITI — Property Transfer Tax?

The ITI applies to paid transfers of real estate and other legal transactions that effectively result in a change of property.

In addition to traditional sale contracts, the tax will now also cover:

• Promises of sale where the property is already “traduzido” (formally delivered);

• Leases with a clause that property transfers automatically after rent payments;

• Acquisition of shares or stakes that effectively give control of real estate;

• Irrevocable powers of attorney that grant the right to sell;

• Promise‑contracts with assignment of contractual position clauses.

These rules aim to limit tax evasion by ensuring that economic transfers of ownership are taxed.

Who pays it?

The buyer pays. In cases of partition or swap, the party receiving the more valuable property pays.

How much?

There is a standard rate of 1% of the property’s value.

For example: a property valued at 10,000 contos → ITI = 100 contos. How is it collected?

The tax is settled at the municipality before the transfer. Payment must be made within three working days, otherwise the transfer has no legal effect. Proof of payment is required for property registration.

2. What is the IPI — Real Estate Property Tax?

The IPI replaces the property‑value part of the IUP and introduces a more transparent evaluation and taxation model.

Technical and periodic evaluation

Properties will be assessed periodically by Municipal Assessment Commissions using objective criteria such as:

• Construction cost

• Location

• Area

• Quality and comfort

• Age / depreciation (vetustez)

• Zoning

The base rate is 0.1% on the assessed (patrimonial) value.

Higher rates

To discourage urban abandonment and speculation, the IPI includes surcharges:

• Vacant, ruined or degraded buildings: +25%, with a 20% annual increase;

• Buildings whose main facade is still unfinished: +10%.

Practical examples:

An apartment with a patrimonial value of 5,085,503 CVE:

— Annual IPI: ~4,322 CVE

— Previous IUP: 26,227 CVE

— → A significant decrease.

A plot of land with a development value of 30,000,000 CVE:

— Annual IPI: 4,500 CVE.

3. Expected Impacts of the Reform

The introduction of ITI and IPI should bring several positive effects:

• Greater fiscal fairness

Properties will be taxed more coherently with their real value and use.

• Increased transparency

Uniform rules based on technical criteria reduce arbitrariness and distortions.

• Modernization of property matrices

Municipalities will have better tools to update and manage real estate information.

• Stimulation of investment

Proportional taxation and penalties for abandonment can boost construction, rehabilitation, and productive land use.

• Financial strengthening of municipalities

The revenue is fully reinvested in the municipalities, strengthening local investment capacity.

A Structural Change with Lasting Effects

The replacement of the IUP (Property Tax) with the ITI (Real Estate Transfer Tax) and IPI (Tax on Industrialized Products) codes represents a profound transformation in the Cape Verdean tax system. From 2026 onwards, property taxation will become more transparent, technically sound, and aligned with the country's urban, tourism, and economic dynamics.

For owners, investors, and companies, understanding these two taxes will be essential for planning purchase, sale, investment, and asset management decisions.

This topic was discussed in detail in the most recent episode of the podcast “Economia Descomplicada”.

Listen to the full episode here: https://share.transistor.fm/s/74bf9dd7