Buying Property in Portugal

Once you have decided upon buying a property in Portugal and would like to take the next step and submit an offer to the vendor, you can count on Portugal Property Experts to represent your best interests. We understand that the purchase of a property is not only a substantial financial investment but can also be an emotional experience and generally speaking the buyer and seller have very different objectives when it comes to price! This is when you can trust us to represent your best interests in a detached, professional and experienced manner and secure the best deal for you. We are also happy to recommend an experienced lawyer and other professionals to assist in the transaction.

 

We always recommend that our clients have a mortgage in place as this puts you in a much stronger position and can avoid disappointment if you need to secure the property quickly. If you haven't a mortgage in place and would like help please let us know as we can help you obtain finance at very reasonable rates. Once the hard bit is out the way and you've agreed terms and conditions for the purchase, appointed a lawyer and have your funds in place, the procedure for buying a property in Portugal is usually as follows:


Private Ownership


The buyer and seller sign a promissory contract (CPCV) that includes the agreed terms and conditions such as the price, payment conditions and date of completion of purchase of the property. It is common that the buyer pays the seller a minimum deposit of 10% when they sign. The Portuguese law protects both parties in the sense that, if the purchaser withdraws from the sale the purchaser will forfeit the deposit paid to the seller. Similarly, if the seller withdraws the sale, the seller is obliged to return to the buyer, in double, the value of the deposit paid. If the property owner is company owned abroad the lawyer will have to do the necessary due diligence and draft a share purchase agreement which will outline the terms and conditions of the sale. When the purchase of the home is subject to a bank loan, a provisional registration is made in favor of the bank. This is done to protect the bank and the buyer. 


Corporate Ownership


Buying a property in Portugal offshore in a white listed jurisdiction can have substantial tax advantages on capital gains, income and property taxes. It involves buying the shares in the company that 'holds' the property as an asset. This is usually done privately by signing a Share Purchase Agreement (SPA). Both buyer and seller should still instruct a local lawyer conversant with this type of transaction as the usual searches on the property here in Portugal must be carried out, most lawyers are familiar with this type of corporate transaction. A Share Purchase Agreement is drawn up, the usual deposit paid and a completion date is set as normal. Although there are others, currently Delaware, Malta are the most popular whitelisted jurisdictions for holding property. This has been especially so since 2003 when the Portuguese government blacklisted and thus penalised most of the offshore tax jurisdictions, however Malta and Delaware were not penalised. 


Once the promissory contract has been signed you will need the following documents ready for the Escritura (Completion):

 

    • 1. Caderneta Predial (Tax Registration Document) from the Finanças (Tax Office) which shows the tax situation of the property including the property's inscription for fiscal purposes, the current owner, the property's fiscal number etc.
    • 2. Certidão de Teor (Land Registry Document)- This document shows who owns the property, who has rights to the property and if there are any charges, mortgages or encumbrances registered against the property.
    • 3. Licença de Habitabilidade (Habitation License) for properties built after 1951 a habitation license is required. This document shows that the property has, at some time in the past, obtained a certificate deeming it fit for human habitation.
    • 4. Ficha Técnica de Habitação (The Property's Technical Report) It contains the builder's details, materials used by the builder, who supplied them and other relevant technical information.
    • 5. The Property’s Plans - whenever you are buying a property in Portugal these should be supplied, ask your lawyer to check that everything is as it should be.
    • 6. Identificação Fiscal (Fiscal Number) As a future home owner you will also be required to get one of these from the Local Tax Office. Usually your lawyer should take care of this for you. Also ask your lawyer about sorting out fiscal representation for you.
    • 7. Survey- A structural survey is not a legal requirement under Portuguese law and banks don’t usually ask for it either on most properties, but when buying property in Portugal as elsewhere you know the saying “If in doubt, check it out” particularly if you're looking at older properties.
    • 8. Energy Rating Certificate: As of 1 January 2009 before buying property in Portugal you must be shown a valid energy rating certificate which grades properties from A-G, A being the most environmentally friendly.

 

Escritura (Deed of Completion)


The Escritura usually takes place in a Notary’s Office (but can also now be done privately through your lawyer) The Notary will oversee conveyancing process ensuring that all documentation is in order, monies have been transferred and that the deeds have been correctly transferred to the buyer. 


You should also consider giving your lawyer a specific Power of Attorney (Procuração) to represent you when buying property in Portugal as this can save you both time and money. All the lawyers we use are fluent in English, Portuguese and many other languages. 


Registo: Once you complete you or your lawyer must register the property at the land registry office (conservatória do registo predial).

 

Investment costs:

 

When buying a property in Portugal your investment expenses can amount to up to 10% of purchase price broken down as follows:
 

  • Lawyers fees: 0.5% - 1% of property transaction
  • Notary, registration and or mortgage stamp duty 1%-3%
  • IMT (Property tax) - 0%-10%


We'd be happy to answer any queries you may have regarding buying property in Portugal


All reasonable care has been taken to provide accurate information, we do however recommend you seek independent financial and legal advice when buying property in Portugal. 


If you are an investor from a non-EU country you may be interested in learning more about obtaining a visa for Portugal through property purchases or investments. 

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(00351) 289 358 678

Avenida 5 de Outubro Edificio Bia,

Bloco 3, Loja U, Almancil

Algarve Portugal

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