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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.

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