Portuguese buying process

We work with an agency in the Algarve who sell a wide of properties from building projects to apartments, fincas, villas and estates in the Algarve and some properties towards the Alentejo.  Please contact us for further information on 01598 710134.

 

For your information, our agent has provided the following updated guide to the buying process in Portugal.

Purchasing Property in Portugal

The Portuguese property purchasing process is fairly straightforward and offers good protection for both buyer and seller. The information below will help to guide you through the stages.

Extra costs to consider:
You should allow 3-10% on top of the purchase price to cover:

  • Purchase Tax (IMT) which is based on a sliding scale from 0% to 6.5% of the declared value.
  • Notary charges
  • Stamp Duty
  • Legal charges Find out how much your lawyer will charge before you instruct them to do any work!

Buying in Portugal should be easy if you take professional advice and are aware of the following:

Important Basics

Professional Legal Advice

Foreigners, unable to speak Portuguese, or speak it to only a limited degree, often decide to rely on using some form of legal advice when buying property in Portugal.

We recommend reliable English speaking lawyers with whom we work on a regular basis and who provide excellent service at affordable fees.

Power of Attorney / Procuração

If it is not possible for you to be present to sign the escritura, you may grant someone power of attorney (Procuração) to act on your behalf.

The simplest way to grant a power of attorney is whilst you are in Portugal, through your legal representative or at a Notary’s Office. Otherwise, the power of attorney can be prepared by the Portuguese Consulate in your country of residence, or by a local notary – but in this case it must be accompanied by a Notary Certificate of Apostille of the Hague Convention and translated into Portuguese.

Fiscal Number / Numero Fiscal de Contribuinte

Firstly, to purchase property in Portugal, you will need a fiscal (tax) number (Numero Fiscal de Contribuinte). Applying for a fiscal number is a simple procedure and you will be issued with your number immediately. It does not cost very much, your lawyer can assist with this or go to your local tax office (Repartição de Finanças), with proof of identity (passport) you will also need an address in Portugal to which the tax office can send your fiscal card (Cartão de Contribuinte). If you do not yet have a Portuguese address you will normally be able to use that of a solicitor, estate agent, or a friend. If you change address you must report to your new tax office or Taxpayers Advice Office (Serviço de Apoio ao Contribuinte). Most towns have a tax office.

Promessory Contract/ Promessa de Compra e Venda

Once you have decided on the property and your offer is accepted the next step is to sign a promissory contract (Promessa de Compra e Venda) with the owner. In which you promise to buy the property, and the owner promises to sell it to you, at an agreed price and within an agreed timescale. At this point you will pay a deposit, normally 10% of the purchase price, agree on a date, by which to complete the purchase. Other conditions may also be specified in the promissory contract, such as completion of any building work, connection of electricity, etc. If you fail to complete the purchase you will lose your deposit, and if the owner fails to complete the sale they must repay you twice the amount of your deposit.

Necessary Documents

Certidão de Teor showing if there are any outstanding mortgages on the property and if the property is registered in the owner’s name.

  • Caderneta Predial, from the Fiscal Department (Finanças), detailing the size of the property, its location and boundaries, and a brief description. In the case of land there may also be a drawing of the plot.
  • Confirmation from the Tax Department (Finanças) confirming that all the rates bills (IMI) are paid. This is important as any outstanding IMI tax will stay with the property and be the responsibility of the new owners.
  • Proof of payment of IMT.
  • Houses built or altered after 31 December 2003 should have a “Ficha tecnica de habitação”, containing information about the property such as builder’s details, type of materials used and suppliers, etc.
  • Identification documents and tax numbers of the owners and buyers.
  • Power of attorney and the representative’s identification document and tax number (if applicable).

 

If the seller is a company, the following is required:

  • Certidão Comercial, issued by the Conservatória do Registo Predial which identifies the partners as well as what powers they have in the company.
  • Identification documents and tax numbers of the company partners/owner.
  • Power of attorney from the other partner to the one signing the Deeds (if applicable).

 

Purchase Taxo / Imposto Municipal Sobre Transmissão Onerosa de Imóveis (IMT)

You must pay any purchase tax (IMT) before you complete the sale and proof of payment must be shown to the notary.

There are 2 different scales for IMT, one applies to main residences and one for second homes, see below:

 

IMT/Property Tax in Portugal

The rates of property tax in Portugal vary depending on value and type of property purchased and whether it is to be your main residence or second home. Below are the current rates of property tax in Portugal.

IMT for land only (prédio rustico) is 5%.
IMT for construction & urban properties not for habitation (eg Armazens or storage) is 6.5%.
For mixed land (predios mistos) the rustic part attracts the flat rate of 5%, with the urban part rated either as the chart below or 6.5%.

Main Residence

 

Value of property %Tax payable Deduction
Up to €92,407. 0% 0
€92,407 - €126,403 2% €1,848.14
€126,403 - €172,348 5% €5,640.23
€172,348 - €287,213 7% €9,087.19
€287,213 - €574,323 8% €11,959.32
Over €574,323 6% 0
Enter value of purchase   IMT payable
 

 Second home
 
Value of property %Tax payable Deduction
Up to €92,407. 1% 0
€92,407.-  €126,403 2% €924.07
€126,403 - €172,348 5% €4,716.16
€172,348 - €287,213 7% €8,163.12
€287,213-  €550,836 8% €11,035.25
Over €550,836 6% 0
Enter value of purchase   IMT payable
 

 

These figures act as a guide, you should consult your lawyer or Tax Office as they may be changed at any time

Paying for your property

You will need to open a Portuguese bank account to pay for the purchase of property, taxes, solicitors, etc. and utility bills, rates, etc.

There are a number of companies specialising in foreign currency exchange, especially for the purchase of property abroad, they can offer more favourable rates than banks and if required we can recommend such companies

Completion of Sale /Escritura Publica de Compra e Venda

To finalise the sale, all parties involved in the purchase/sale must attend at the Notary’s office; unless you have granted someone power of attorney to act on your behalf. If you don’t speak Portuguese a translator should be present, all the relevant documents must be available (your legal representative will normally organise this). You and the seller read the Deed of Purchase and Sale (Escritura Publica de Compra e Venda) which all parties sign. The balance of the purchase price is paid and the property is now yours! An official copy of the escritura (obtainable from the notary) is submitted to the land registry (Conservatória do Registo Predial) where the property registered in your name, a lawyer will do this in most instances

Exemption from IMI (Annual Rates / Council Tax)

Your lawyer or legal representative can advise if you are able to apply for this or not.