Buying Property in Portugal | Essential Guide | Portugal
Property in Portugal | Buying | Selling | Essential Guide
Guide to Buying Property in Portugal.
The procedures and legal acts that are involved in acquiring a property in Portugal may seem complicated, it is our aim to help the process and explain the basics. We recommend that qualified legal advice be sought when purchasing a property in Portugal .
Instruct Lawyers or Solicitors (Advogados or Solicitadores) who are fully qualified and whose conduct is controlled by the Portuguese Law Society. Never use a lawyer who is acting for the vendor or a Lawyer who shares the same office as the vendor’s lawyer. You can give your Lawyer or anyone else specific Power of Attorney to sign documents on your behalf, but closely monitor procedures and ensure that the proper steps are being taken without any undue delay. Lawyer’s fees are generally between 1.5% and 2% of the purchase price of the property.
Searches
Having chosen a property, your Lawyer should search the local Land Registry (Conservatora do Registo Predial) to confirm that the vendor (Vendedor) has clear title of ownership and that no-one else has rights, charges or mortgages over the property. Your Lawyer must also check that the property registered conforms to the actual building and plot size being sold to the purchaser.
Fiscal Number
Your lawyer will apply for a fiscal number (numero de contribuinte) at the local Tax (Finanças) office, this document is mandatory and you must have one to purchase a property. The fiscal number will come in the form of a card, which you will need for payment of annual property taxes, supply of services to the property or to open a Portuguese Bank Account.
Tax Document
Your Lawyer will obtain the official tax document (caderneta predial) relating to the property from the vendor and check that the description of the property (number of rooms, area of house, area of land, etc) is the same as in the land registry.
Usage Licence
Your Lawyer will obtain a copy of the usage licence (licença de utilizaçao) from the local town hall (Camera Municipal). For residential property, you will need a Habitation Licence (licence de habitçao) which confirms the town hall has inspected the property and that it complies with the planning permission and building regulations. Non-residential licences need to stipulate the appropriate commercial or industrial use.
When a buyer is considering purchasing a piece or plot of land for the construction of a future home it is important that the property has either a building license or the possibility of obtaining a license subject to architectural plans submitted to the authorities. It should also be confirmed that the land is registered for building purposes and not agricultural land.
Planning permission can also be based on a previously granted license for construction, or a building such as a ruin, which is also classified as being an acceptable basis on which a license can be granted.
Other Enquiries
There are other checks and enquiries which are strongly recommended and should be carried out:
Ask your lawyer to examine the local development plan to ensure that there is no construction or developments planned for the area.
If buying in a development, check the regulations governing the development as well as any obligatory condominium charges. If you are buying a plot of land in an urbanization, check the urbanization building regulations.
This does all add to the legal expenses, but it cannot be stressed enough that in making these enquiries you will fully understand all the obligations you are taking on in making this investment. It should not be assumed that Portuguese laws and building regulations are the same as those required in your own home country.
Contract
A Promissory Contract of purchase and sale should be drawn up by your Lawyer (Contracto de Promessa de compra e venda ) this should be signed by you and the vendor. It should include:
- Identification of the parties
- Identification of the property
- Agreed terms and conditions of the contract
You will normally have to pay the vendor a deposit of 25-30% of the full purchase price at this stage. The contract can be signed in front of a Notary. It is legally binding on both the purchaser and the vendor. If the purchaser defaults the deposit is forfeited. If the vendor defaults, the purchaser is paid double the deposit (or, if a clause of specific execution is included, the vendor cannot withdraw and the purchaser can legally force the vendor to sell)
IMT
Prior to act of purchase, the purchase will usually be subject to a State payment named "Imposto Munipal Sobre Transmissões - IMT" which replaced the originally known Tax known as "Sisa". This Tax is paid in the local Tax Office nearest to the location of the property being purchased. The amount charged is dependent upon the nature of the purchase and does vary. In certain cases the buyer may be exempt from paying this Tax if the value of the deed of conveyance (escritura) is below the figure of € 80,000.00. Below is shown a table for your guidance based on a series of "platforms of sale value" and is applicable to all urban purchases.
All Rural properties are subject to a flat 5% Tax based on the escritura value.
Any purchase in an Offshore Company is subject to a Tax of 15% applied to the escritura value.
Notaries & Registration Fees
These are paid by the purchaser on completion and are broken down as follows:-
Stamp Duty - 0.8% of total sale value Final Deed admin costs €175
Outstanding Annual Property Taxes (IMI)
Unpaid property taxes (IMI) attract fines, but may be allowed to mount up for some considerable time without official action; so ask the vendor to show proof of payment for the last five years. Any outstanding property taxes should be settled before you make the final payment (your lawyer should do this for you).
Final Deed
Proper title to the property comes with the final deed of conveyance (escritura) which is signed in the office of a public notary. All the relevant documents are checked before the final contract is read aloud and unless the purchaser understands Portuguese, interpreted in the buyer’s language.