The Beauty of purchasing a property in Portugal is the simplicity of the process. It’s fairly straightforward and offers good protection for both buyer and seller. Here is some information to guide you through your purchase.
Extra costs you will need to consider:
It’s a good practice to always allow 3-10% on top of the purchase price to cover things like:
- 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 usually around 700-1,000 euros. Always inquire your lawyers cost before appointing them on any task.
While it is easy to purchase a property in Portugal, it is always advisable to pay special attention to all the hidden dangers that can crash your property dreams.
Fiscal Number (Numero Fiscal de Contribuinte)
The first thing to do when you wish to acquire a property in Portugal is to apply for a fiscal (tax) number (Numero Fiscal de Contribuinte) as you will need these for the purchase to go through successfully. This fiscal (tax) number (Numero Fiscal de Contribuinte) costs about 5 euros to apply for after which you would be issued with your number straightaway.
You’ll need to go in person to your local tax office (Repartição de Finanças), as well as proof of identity (your residency card, identity card or passport), you will 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/when you change address you must report to your new tax office or Taxpayers Advice Office (Serviço de Apoio ao Contribuinte). There are Tax offices in most towns.
Promissory Contract (Promessa de Compra e Venda)
When you find a property that bests meets your espectations, you can go ahead to sign a promissory contract (Promessa de Compra e Venda) with the actual owner of the property. The promissory contract simply certifies that 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) and agree on a date (normally anything up to 6 months) 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.
Though it’s not a must for the promissory contract to be drawn up by a solicitor, we highly recommend you let them bring it out.
You may decide to speed up the purchase of the property by paying the total agreed price at once. However, we equally advice you get in touch with the solicitor to make clear your intentions.
Certidão de Teor which shows 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. There maybe a drawing of the plot in cases of land
- 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.
- Tax numbers and Identification documents 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, you will also need to provide:
- Certidão Comercial, issued by the Conservatória do Registo Predial which identifies the partners as well as what powers they have in the company.
- Tax numbers and Identification documents of the company partners/owner.
- Power of attorney from the other partner to the one signing the Deeds (if applicable).
Professional Legal Advice
For foreigners who are unable to speak Portuguese or only speak a little, it is advisable they go by some form legal advice when buying property in Portugal.
Types of Representative
There are basically two types of representatives you might approach. Either a solicitador(a) or an advogado(a).
A solicitador(a), Unlike the local English meaning, In Portugal, a solicitador(a) is more affiliated to someone who does conveyance. A solicitador(a) does not have to study for a degree and are regulated by the Câmara dos Solicitadores by going to www.solicitador.net. Go to the bottom left hand corner, where it says Pesquisa Solicitador and put in the information you have about the solicitador(a) you are searching for, such as their : surname (Apelido), first name (Nome), town/area (Comarca), postal code (Código Postal) and then click on Pesquisar.
You will be provided with a list of solicitadors with that surname in that area with their registered numbers (Cédula Nunbers).
If you would like to check for the firms of solicitadors, click on Pesquisar sociedades beneath the individual search boxes and put in the name (Nome) and the area/town (Localidade) and then click on Pesquisar.
Doing Your Own Checks
Don’t over misled, having a legal representative who has a degree and a few initials after their name does not guarantee that they will behave in a moral and ethical manner that guarantees your protection, it is thus highly recommended that you do your own personal checks alongside those of your legal representative.
Take time out to do your own personal check to ensure everything moves on smooth, you might need to hire a translator if you don’t get along with Portuguese that well.
Selecting Your Legal Representative
While most real estate agents, builders and developers will recommend you a lawyer or solicitador(a) , this most often turns out not to be their lawyer or solicitador(a). It is therefore always advisable for you to get your own independent legal representation and preferably from an area well away from the real estate agent, builder or developer. If you don’t, you can never be sure that they will be acting in your best interests and not those of the vendor. It has also been known for a lawyer to act for both vendor and purchaser. This is not permitted and totally unethical. Another practice is to sometimes get a lawyer “friend” (often working from the same office) to deal with the other party. In effect, the purchase and sale is then still very much “under one roof.”
Be ethical when picking up a legal advice and keep a close eye on proceedings. You may seek quotations from a few lawyers/solicitadores. On average they charge 1 to 2.5% of the property purchase value for their legal fees. Nevertheless, taking up a layer just because he is cheaper isn’t a good idea as it is advisable to spend more and get the best of expertise on your side.
Power of Attorney (Procuração)
In case you can’t make it to the signing of the escritura, grant someone the power of attorney (Procuração) so he can sign the escritura on your behalf.
You can easily grant the power of attorney at the Notary’s Office in Portugal. Nevertheless, the power of attorney can be prepared by the Portuguese Consulate in your country of residence, or by a local notary. However, it must be translated into Portuguese and accompanied by a Notary Certificate of Apostille of the Hague Convention.
Purchase Tax (Imposto Municipal Sobre Transmissão Onerosa de Imóveis (IMT)
All purchase taxes (IMT) must be paid before the sale and proof of payment must be shown to the notary.
There are 2 different scales for IMT, one applies to permanent residences and one for second homes, see below:
IMT for land only (prédio rustico) is 5%.
IMT for construction & urban properties not for habitation (eg Armazens) 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%.
IMT on other properties is on a sliding scale based on the value of the property:
Purchase Price (euros) % of Purchase Price Adjustment (reduce by euros)
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 – single flat 6%
Non Permanent Occupation
Purchase Price (euros) % of Purchase Price Adjustment (reduce by euros)
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 – €574,323 8% 11,035.25
over €574,323 – single flat 6%
These figures are correct for 2011.
Paying for your property
It is important to consider opening a Portuguese bank account to pay for the purchase of property, taxes, solicitors, etc. and utility bills, rates, etc. that you will need to pay when owing a property in Portugal.
We work in partnership with a number of companies specializing in foreign currency exchange, especially for the purchase of property abroad, who often offer a much more favourable rate than banks.
Completion of Sale (Escritura Publica de Compra e Venda)
Finally, you, or your representative must make an appointment with the with the Notary 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 (see below). If you don’t speak portuguese you must have a translator present, and you must take with you all the relevant documents (your solicitor will normally organise this). You and the sellers will be read the Deed of Purchase and Sale (Escritura Publica de Compra e Venda) which you will then all sign. That done, it is then time for you to pay the balance to meet up with the agreed price when signing the promissory note.
When you are done with all the signing the property then belongs to you must still take an official copy of the escritura (which you get from the notary) to the land registry (Conservatória do Registo Predial) to have the property registered in your name. If you intent to use the property as your main residence you will normally be able to claim the first 6 years free of rates (IMI), so long as you take up residence within the first six months you are being identified as he rightful owner.
Exemption from IMI (Annual Rates / Council Tax) (Isenção de Imposto Municipal sobre Imóveis)
A first-time buyer, you are eligible (within 60 days from the signing of the escritura) to apply for an exemption from paying IMI at the Finanças for the area where the property is located. The period of acquisition is counted either from the date of acquisition (for a property which is not new) or emission of the municipal license of use (for a newly-built property). It is important to note however that this exemption is only applicable on primary homes and not second or holiday homes.