Advice & help from Expats living in Portugal, Talk -
Help and advice for Expats and visitors to Portugal
Renting a property
Buying property guide Portugal.
All you need to know on how to buy a property in Portugal.
Property Registration Fee: You will have to register the purchase with the Property Registry Office (Conservatória do Registo Predial) of the area in which the property is located, and at the Tax Office (Repartição de Finanças). The costs are as follows:
o Registration of purchase is a fixed value of €250.
o Registration of mortgage is a fixed value of €250.
o Extras usually do not exceed €100.
Stamp Duty or Imposto de Selo: This is 0.8% of the purchase price.
Notary fees: When the Notarial profession was privatised, Notary fees changed substantially and now depend on the office where the Escritura is signed. The Escritura Pública de Compra e Venda (to give it the full name) has to be drawn up; signed by both parties in front of a public notary and lodged at the local Land Registry (Conservatoria do Registo Predial), with copies issued to the involved parties.
VAT (or IVA): 20% on all new properties (normally included in the price, but check this).
Buying property in Portugal is quite straightforward and similar to buying property in any other foreign country. Above all else it is vitally important that you instruct the services of a reputable lawyer and notary.
When you have decided on your purchase you will normally be asked to sign a promissory contract and pay a deposit. If you withdraw after this you may forfeit the deposit. If the vendor withdraws he may have to compensate you.
If you are buying 'off-
The deposit paid, your lawyer should then run the necessary checks. In the past it has been quite normal for Portuguese property not to have a title deed or to be sold by someone who is not the legal owner. This is changing, and certainly these types of problems should not arise with a new development.
Your reputable lawyer therefore needs to check that:
The title deed is in order and is owned by the vendor.
There are no outstanding charges on the property.
The property itself has planning permission and all other necessary licences.
The terms of the contract are fair and reasonable.
Once all the necessary searches have been carried out and you are satisfied, the lawyer will arrange for any fees and taxes to be paid and for the title deed (escritura) to be transferred into your name and registered with the Portuguese Government Land Registry.
The escritura includes a detailed description of the property as well as carrying the name of the person legally owning it, and needs to be signed by the purchaser and vendor in front of a notary. If you cannot be in Portugal to attend the signing you can give Power of Attorney to your lawyer instead providing all parties agree. The importation of funds to buy the property usually needs to be recorded with the Portuguese authorities.
The notary is a public official who is there only to put on public record the fact that the title deed documenting the transfer of the property has been signed in the notary’s presence and understood by all parties concerned. When the escritura is signed in front of the notary, either the funds are handed over in his presence, or the vendor confirms that the money has already been received. Proof of the payment is incorporated into the title deeds.
The charges made by the lawyer in dealing with the basic legal administration in the purchase of property that already exists is usually 1% of the purchase price subject to a minimum charge of around €1,100. If the property is under construction, or there is extra work that the lawyer undertakes, a further charge may be made. Extra work may include negotiations concerning the price, sorting out any problems with the title deed and dealing with utility companies.
VAT (IVA in Portugal) at the standard rate of 21% will be charged on estate agent, legal and survey fees, and on all purchases of building materials as well as the builder’s fees if you build or extend a property.
The notary’s fee will vary. A fee is also payable to the land registry. Together, these fees typically amount to between 1.5% and 2% of the value of the property.
The purchase process and registration could take several months before you receive the title deeds.
IMT and IMI Property Taxes A purchase tax, Imposto Municipal sobre Transmissôes Onerosas de Imóveis (IMT) of between 0% and 8% (depending on the declared value of the property -
Rustic property (not qualified for construction) is subject to a fixed IMT rate of 5% with no tax-
There is an annual municipal tax (similar to UK Council Tax) called Imposto Municipal sobre Imóveis (IMI), based on the VP and fixed by each municipality. The rates range from 0.2% to 0.8%, depending on the location and age of the property.
It has long been common practice in Portugal for the purchase price of a property to be under-
If the authorities suspect that the purchase price has been under-
VPs still bear little resemblance to the real market value of a property and are being systematically reviewed, especially when a transaction occurs. The new VP values will follow a formula that takes into account criteria such as size of the property, the location and quality of build. In many cases the increase in registered value will be substantial.
Offshore Companies A common method of purchasing Portuguese property was to purchase through an Offshore Company (OC), often set up in Gibraltar or the Channel Islands, jurisdictions which the Portuguese authorities came to define as Tax Haven Offshore Companies (THOCs).
This practice, which offered a lower rate of SISA (now known as IMT), allowed the owners to avoid paying many of the taxes due, including capital gains and inheritance taxes.
The Portuguese authorities introduced punitive taxes on property bought through THOCs so that it was no longer financially beneficial to purchase in this way. It was meant to discourage the practice, but for those who already own property through a THOC, it means much higher tax bills.
IMT for these properties was increased to 15%, and the annual tax (the IMI) has been increased to 5% per annum. Both of these increases are based on the revalued price of the VP. For example, on a typical mid-
In addition to these taxes, the Portuguese tax authorities suspected that THOC owners of property failed to declare rental income. In order to ensure that this no longer occurred, an fixed annual tax charge of 25 per cent has been introduced, payable on a deemed rental income of one fifteenth of the rateable value of the property, on all THOC-
The cost of utilities connected to the THOC property, maintenance bills and municipal tax can be deducted against the one-
The company can be re-
This information has been provided by Blevins Franks, www.blevinsfranks.com
Now here is the long drawn out version with legal stuff
Here is a brief list of what you may expect in the way of purchase costs. Please be aware that these costs have changed dramatically over the last few years and you need to make sure exactly what they are when you buy. At time of writing they are as follows:
Fiscal representation: Companies usually charge an initial fee of approximately €250, and an annual fee of approximately €250 for services as outlined above.
Estate Agent's Fees: These are paid by the vendor.
Legal Fees: Solicitors typically charge between 1-
Municipal Transfer Tax or IMT (Imposto Municipal Sobre Transmissões Onerosas de Imóveis): This is basically a purchase tax, payable by the purchaser when a property's title changes ownership. IMT varies considerably from 0.2-
Land Registry Fees: Land Registry charges are 0.5% of the purchase price.