Buying property in Portugal remains popular with British Buyers.
The process of buying is quite a simple one if you receive good
advice and understand the basic legal and tax issues involved.
Please donít forget to search out good legal advice and never
forget to seek answers and ask yourself the following four questions:
Have you completed research on all aspects of the property purchase?
Have clear goals of purpose been set for the property?
Have I obtained as much advice as possible?
Have I been cautious in all of my actions?
Once you have found your ideal Portuguese property it is important to
familiarise yourself with the local town hall (Camara) and an
independent Portuguese lawyer.
- Your chosen lawyer will need Parcuracao (power of Attorney) to act
on your behalf. The power of attorney can be requested at consulate
offices or at the Notary office.
- You will need to register at the Financas (tax office) and receive
a fiscal number.
- The searches on your property will be carried out and you should
only continue if the property has been correctly registered at the
Conservatoria do Registo Predial (land conservatory) in the sellers
name. The searches will show both the history of the property and
whether charges exist against it or the land.
- If your property is a place of residence it needs to have a
Licencca de habitacao (habitation license) which is issued
by the local town hall.
- If your property is situated in an urban area then it will have a
Carderneta Urbana which is issued by the local tax office. It will
show the boundaries of the plot including its precise location. It
will also indicate the rateable value of the property and the annual
tax payable for it to the local town hall. Completing a search of the
property in the local tax office is therefore advisable in the same
way as searches at the land conservatory.
- Once this initial research has been undertaken and confirmed then
both parties enter into a Contracto de Promessa de Compra e Venda
(promissory contract) this will be signed at the Notary office and
is legally binding. The buyer will at this point pay an amount of
the purchase price (this is similar to a deposit in the UK). The
Notary and the parties will agree a time for completion of the
purchase to occur at this point.
- The deposit paid is protected in that if the seller withdraws from
the sale they are required by Portuguese law to pay twice the deposit
back to the buyer. If the buyer withdraws they loss there deposit.
- Property tax is charged and payment required prior to completion.
This payment is made by the buyer. This Sisa Tax is payable to the
local tax office. This tax is variable according to the cost of the
property but is high at 10% of a property in the region of 160,000 euroís.
- The sale can be executed once this has been completed. The sale is
executed in the presence of the Notary and the balance of the
purchase price is paid according to the promissory contract.
The sale is completed with the Escritura de Compra e Venda (Deed of purchase).
- This deed then needs to be presented to the Conservatoria (land Conservatory)
when it is register in the name of the new owner. A registration fee is
charged at 0.75% of the purchase price.
- Payment to the Notary and the Lawyer is also required. Legal fees can vary
between 0.5% and 3.5% but are typically around 1.75%. The fee payable to the
Notary is typically around 1.25%. These fees should be negotiated prior to
signature of the promissory contract.
- When coming to resell your property it is important to consider capital
gains tax. For non-resident owners capital gains are taxed on the basis that
one half the capital gains are added to the taxpayerís income for income
tax purposes. If the owner is in residence then capital gains is not payable
if the full sale value is invested in another property in Portugal within two
years of the saleís completion.
- Portugal also has Inheritance tax issues which are of note. The rate is
dependent of the relationship with the beneficiary and on a graduating
scale of the property value as recorded at the local tax office.