PROCESS FOR BUYING A PROPERTY IN PORTUGAL
 In Portugal to purchase a property is a regulated and fairly straightforward process. To ensure that the property that you wish to purchase is free of any debts or restrictive clauses, it is absolutely essential that you firstly employ an English-speaking lawyer/solicitor to protect your interests. It is also recommended that when dealing with Portuguese estate agents that they are government licensed and must be identified by an AMI number.
Opening a Bank Account
 Although it is not required, it is definitely recommended that you open a bank account. Many foreign banks have branches in Portugal and they can help in transferring funds and setting up any regular payments for utilities, so you don’t have to worry about monitoring all of the bills when you are out of the country. Property Management companies also work directly with the banks to set up these payments and they can also arrange for your property to be rented out.
Fiscal Number (Numero fiscal de contribuinte)
As a future owner of a Portuguese property, you will firstly need a fiscal (tax) number which can be obtained at the Local Tax Office in Portugal. This is a simple procedure and the number will be issued immediately. If you go in person to the Tax Office you will need proof of your identity and an address in Portugal to which the Tax Office can send your fiscal card (Cartão de Contribuinte). If you do not have an address, you can use that of your solicitor, estate agent or a friend. Sometimes, however it is an advantage to open a local bank account as you are then automatically assigned a Personal Fiscal Number by the local Tax Office when you set up the bank account and you therefore, do not need to personally visit the Tax Office.
Obtaining an Overseas Mortgage for your Property
We at VML Portugal have teamed up with a leading Mortgage Specialist and we can now help you find the finance you need for your property abroad, and make the whole process as safe and as hassle-free as possible.
Established for over 14 years, our Mortgage Partner has helped thousands of people to arrange their mortgages in over 45 countries. They work closely with overseas lenders and property professionals helping you to buy your property, whether this is for your own personal use or for investment purposes.
These experienced teams of specialists ensure that every step of arranging your mortgage is handled promptly, efficiently and professionally. Fully independent, we can give you a free pre-application mortgage calculation to help in your search for a property.
Want to know approximately how much a mortgage is going to cost you? Just click here to fill out our short Enquiry Form and we will respond by return with our Quick Quotation.
Legal process for buying a property in Portugal
 The legal side falls into two parts, the preliminary “promissory buying and selling” contract which is called a Contrato de Promessa de Compra e Venda. Once you have found the property that you wish to purchase and your offer has been accepted, you will then normally sign a promissory contract with the owner (this document is basically an agreement that you promise to buy the property and the owner promises to sell it you, at an agreed price and within an agreed timescale). It is at this point that you will then have to pay a deposit which is normally between 10%-30% of the purchase price (except in the case of new constructions where the deposit is then usually considerably less). Other conditions can then also be specified within the promissory contract, such as completion of any building works, repairs, connection of electricity etc. Beware though, that if you fail to complete the purchase you will lose your deposit and if the owner fails to complete the sale, they must then repay you twice the amount of your deposit. It is not necessary to have the Promessa de Compra e Venda drawn up by a solicitor, but it is highly recommended that you do so.
Before signing the promissory contract, you or your legal representative must obtain the following legal documents:
Property Registration Certificate (Certidão de Teor)
At the local Land Registry (Conservatória do Registo Perdial) check if the seller has the ownership of the property and that no one else has those rights and also that the property is free of charges and mortgages. The Registration Certificate describes the property’s legal history and proof of ownership and this document is required to perform the completion process at the Notary’s Office.
Property Tax document (Caderneta Perdial)
The official tax document certifies the inscription of the property for fiscal purposes, the current owner and their fiscal number, a description of the property and the property’s unique fiscal number. The official tax document will also mention how much the owner will pay in local yearly taxes. If the property is new then the official tax document will not exist and a temporary certificate will be issued by the building developer.
License of Use (Licença de Utilização)
In this document check if the property has been approved for the purposes of the original building permission. For residential property it is necessary to have a habitation license. For non residential it is necessary to have a commercial or industrial license. This document needs to be presented at the stage of signing the promissory contract.
Ficha tecnica de habitação
Houses built or altered after 31 December 2003 should have this document which contains information about the property such as the builder’s details, type of materials used and suppliers etc.
Other documents that are necessary are confirmation from the Tax Office that all the rates bills (IMI) have been paid. This is very important as any outstanding bills with the property would become the responsibility of the new owners. Identification documents and tax numbers of owners and buyers and lastly, Power of attorney and the representative’s identification document and tax number (if applicable).
Purchase Tax (Imposto Municipal (IMT) )
The purchase tax (IMT) has to be paid at least 3 days before you complete the sale and proof of payment must be shown to the notary. The purchase tax is Portugal’s equivalent of Stamp Duty. IMT for land only (prédio rustico is 5%. IMT on other properties is on a sliding scale which is based on the value of the property.
Table of rates
|
Purchase Price (euros)
|
Percent of Purchase Price
|
Tax Band Adjustment (reduced by)
|
| up to 80,000 |
0
|
0
|
| 80,000 - 110,000 |
2
|
1,600
|
| 110,000 - 150,000 |
5
|
4,900
|
| 150,000 - 250,000 |
7
|
7,900
|
| 250,000 - 500,000 |
8
|
10,400
|
| over 500,000 |
single rate of
|
6%
|
When looking at prospective properties to buy, you should ask what the declared value of the property is. Quite often Portuguese property is not registered at the price you are paying but at a lower value. In this case, you would therefore, end up paying less purchase tax.
Notarial Fees
Other fees are one-time fees, such as Notarial, registration fees and administration fees (Omposto de selo) and is related to the numbers and types of documents that were processed (i.e. certain contracts, deeds, receipts etc). These one-time fees normally account for approximately 2.5% of the declared price. Solicitors and legal fees can be between 1.5% and 2% of the declared purchase price.
If you take out a Portuguese mortgage then a further cost will be passed on to you by your solicitor for registering the charge of the lender with the land registry. Valuations are carried out by the lenders and you as the purchaser will be liable for this cost.
Example breakdown of costs related to buying a property in Portugal
| Purchase Price of Property |
|
450,000,00
|
| IMT (SISA) |
Purchase Tax |
25,392.00
|
| Escritura |
Deeds of Property |
3,834.00
|
| Registo Predial |
Land Registry |
350.00
|
| Procuração |
Power of Attorney |
100.00
|
| NIF's |
Tax Numbers |
50.00
|
| Contrato-promessa |
Promissory Contract |
375.00
|
| Serviços |
Utilities |
125.00
|
| Documentos |
Paperwork |
100.00
|
| Telefone etc |
Telephone / Mail etc |
75.00
|
| Honorários |
Solicitor's Fees |
6,555.00
|
| Avaliação |
Bank Valuation |
600.00
|
| Total |
|
37,556.00
|
Completion of Sale (Escritura Publica de Compra e Venda)
 The completion of the purchase should occur approximately 3-4 weeks after signing the promissory contract when the “escritura” contract is ready to be signed. An appointment has to be made with the Notary and all parties involved in the purchase/sale must attend the Notary’s Office, unless you have granted someone power of attorney to act on your behalf. If you do not speak Portuguese then it is helpful to have a translator present and you must have with you all the relevant documents (your solicitor will normally organise all this for you). You and the sellers will then read the Deed of Purchase and Sale (Escritura Publica de Compra e Venda) which you will then sign.
At this stage, the purchaser must then pay the remaining balance of the purchase price (purchase price minus the deposit), purchase tax plus notarial fees to the notary advogado. It should be noted that the remaining balance and purchase tax must be in the notary advogado’s possession before the “escritura” contract is signed. The “escritura” is the equivalent to the Deeds of the Property. From the signing of the “escritura” contract, the purchaser becomes responsible for the insurance of the building on the property. It is highly recommended that the property insurance includes cover for fire, flood, storm damage and earthquake damage.
The signing of the “escritura” ends with the transfer and new registration of the property in the presence of an official notary. Once this has been done and the property is registered at the Land Registry Office it is legally yours. You must also ensure that the registration document (Registo) is in your name and is lodged with the Land Office and also in the Local Tax Office as soon as possible after the signing of the “escritura”.
If the property is to be your main residence then you would normally be able to claim the first 6 years free of rates (IMI) as long as you take up residence within the first six months after registering the property in your name.
Power of Attorney (Procuração)
If it is not possible for you to be present to sign the “escritura” then you are able to grant power of attorney to act on your behalf. The easiest way to grant a power of attorney is whilst you are in Portugal, at the Notary’s Office. Otherwise, the power of attorney can be prepared by the Portuguese Consulate in your country of residence.
Exemption from Council Tax (Isenção de Imposto Municipal sobre Imóveis)
First-time buyers may apply for exemption from paying IMI. This request should be made within 60 days from signing the “escritura” at a Tax Office where the property is located. Exemption is only granted on main residences and not on second homes or holiday homes.
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