Buying Process in Portugal
With the resurgence in demand within Portugal for properties from buyers all over Europe, there has been an increase in unlicensed estate agents jumping on the bandwagon. This license is granted by the State governing body, INCI, and requires qualification on the part of the Estate Agent before they are issued with their AMI No. It serves as a guarantee that individual Estate Agents must use certain forms of approved documentation to implement their functions in the profession.
The Licensed Estate Agent is also bonded by INCI in the form of an Insurance Cover that enables claims to be made against them in the case of any proven dispute. Once you have made a decision to purchase a property in Portugal, it is advisable to find a lawyer (Advogado) or solicitor (solicitador) who you wish to deal with your purchase, of which there are many who speak English.
It is also essential that a fiscal number (numero de identificação fiscal/NIF) is obtained, this Cartão de Contribuinte is available from the local tax office (finanças). It is also necessary to have your Fiscal number to open a bank account in Portugal, for which you will also need copies of your birth certificate and passport. Having decided on your purchase and put the above into place, it is then that all the official paperwork starts.
This is however something not to be daunted by and all of us here at PPProperty will endeavour to make this process as straightforward as possible. The following pages give you an outline of the due process necessary to complete all paperwork required under Portuguese law.
THE PROMISSORY CONTRACT.
Once you have decided upon your purchase it is normal for a deposit of between 10% and 20% to be left and a Promissory Contract (contrato de promessa de compra e venda) signed. This is a legally binding contract between buyer and seller, prepared by a lawyer and often written in two languages, with Portuguese prevailing as the legal requirement.
THE PROMISSORY CONTRACT INCLUDES;
- The identification of both parties.
- The identification of the property, Article number.
- Confirmation of clear title.
- The price agreed.
- The deposit amount.
- The date of the deadline for signing the Final Deed (Escitura).
- Use of property in the interim period if required. Once the Promissory Contract has been signed and deposit paid, should the seller default he/she is required by law to repay twice the deposit amount to the buyer. If the buyer defaults, they would also lose their deposit.
THE ESCRITURA IN PORTUGAL
Prior to signing your chosen Lawyer/Solicitor should have completed all relevant checks on the property, these include;
- Are there any planning restrictions pertaining to the property that could restrict any future plans?
- Are there any outstanding charges or debts pertaining to the property? Are all utility bills and taxes paid? It is important to remember that all debts on a property are inherited by the new owner.
- Have any works or alterations been done to the property that is not registered and do not comply with the authorities or have a habitation license (Licença de Habitaçao).
- Is the vendor the legally registered owner and if more than one legal owner, have they all consented to the sale.
- Are there any restrictions on the use of the property?
- All boundaries and rights of way are clearly defined.
- Has any survey been completed to your satisfaction?
- If the furniture of fixtures and fittings are included are they specified?
With all these in place, the Escitura can then be signed by both parties in the presence of the Notary and balance of monies exchanged. Although most people like to be present at this time, it is possible to give Power of Attorney (Procuração) to sign on your behalf. The Notary will also make sure that all taxes pertaining to the property will also be paid at this stage.
The signing of the Escitura and handing over of funds is the last stage before the title of the deed is actually passed over. Once you have signed, the Notary will issue you with a stamped copy of the Escitura (it is advisable to get more than one copy at this stage). The copy will carry the seal of the Notary but should not be mistaken for a Title Deed.
The property then needs to be registered on the Land Registry (Conservatoria do Registo Predial), for which there is a charge. This can also take some time to complete and be returned, but under Portuguese Law, you are not the legal owner of a property until the Escitura has been registered at the land registry.
Other tasks to be completed at this stage are registering with the tax office (Autoridade Tributária) and all the utility companies such as electricity (EDP), water, gas (Galp Energia) and telephone (Portugal telecom). To register all of the above you will need your tax number (Numero Fiscal de Contribuinte or NIF) obtained from the local Tax Office (Autoridade Tributária).
Taxes and costs in Portugal
First Permanent Residence In Portugal
The first table applies to the purchase of property intended for permanent residence. Real estate not exceeding 92,407 Euros are exempt.
Table For Imt Permanent Residence
|Value Of Property Liable For IMT||
|Up until 92.407||
|From 92.407 up until 126.403||
|From 126.403 up until 172.348||
|From 172.348 up until 287.213||
|From 287.213 up until 574.323||
|More than 574.323||
SECOND PROPERTY OWNED
|Value Of Property Liable For IMT||
|Up until 92.407||
|From 92.407 Up until 126.403||
|From 126.403 Up until 172.348||
|From 172.348 Up until 287.213||
|From 287.213 Up until 550.836||
|More than 550.836||
|Value of Property Transaction||Tax Percentage|
|Rustic & Agricultural Plots||5|
|Other Property % Urban Plots||6.5|
|Blacklisted Jurisdictions Offshore||10|