The Property Banks Buyers Guide to Portugal
The most important recommendation we
can make to you is, do not sign anything until you have attained
competent and independent legal advice.
Buying a new property can be a daunting prospect with all the legal
processes to consider and more so in a foreign country, where the
language and purchase law is far different. However, with our help
and a reputable legal advisor there will be no need for concern when
buying your new home in Portugal.
We will guide and assist you through the buying process once you
have found the property you wish to purchase. The next step is to
contact a lawyer. Your legal advisor will require full information
on the property, which we will provide, and then will commence the
process as follows:
Land Registry – Conservatoria. A search will be made to check the
land registry title at the local municipality. Where appropriate,
checks on licences and permissions will be made
Inland Revenue - Repartição de Finanças. A search will be made to
ensure tax registration on the property and there are no charges
that may adversely affect the property.
Taxation Number – Numero de Contribuinte. Your lawyer will apply for
your fiscal number through the local Tax Office. Your fiscal number
will be required for many transactions, including opening a bank
account in Portugal.
Contract – Contrato de Promessa de Compra e Venda. A promissory
contract is drawn up between purchaser and vendor. At this stage a
deposit of between 10% and 40% is required. (Dependant on vendor)
This is a legally binding contract and should you wish to withdraw
from the purchase then you will forfeit the deposit. In the event
that the vendor defaults, then they must repay double the deposit.
SISA tax - Will be replaced by a new tax called Imposto Municipal
sobre Transmissões - IMT which will have lower rates than the
current tax. Thus, the maximum rate will be 6%, instead of 10% as
before, and the exemption limit has been increased. Please see the
chart below.
IMT Tax Scale
Percentage Deductions
Until 83.500 0% €0
From 83.500 until 114.800 2% €1,670
From 114.800 until 156.500 5% €5,114
From 156.500 until 260.900 7% €8,244
From 260.900 until 521.700 8% €10,853
Up from 521.700 6%
6%
(b) Buying Rural Land plots - 5%
(c) Buying Urban Land plots - 6.5%
Purchase of agricultural land will have a rate of 5% instead of 8%,
and purchase of shops and plots of land for construction will be
subject to a rate of 6.5% instead of 10%. Also, instead of the tax
being calculated on the declared price of the property, hitherto it
will be calculated on the market value of the property. For that,
the Finance Department is re-evaluating all the existing properties
and new property will be evaluated taking under account several
aspects, like location, size and construction costs. However, if a
property is to be purchased by a company based in one of the
black-listed territories stated in Law nº 1272/2001 the rate of SISA
will be 15%. Because of pressure from builders and local councils,
which feared a freeze in sale of properties until the new law has
been in effect, new SISA rates have been introduced according to
what is stated above.
Final Deed – Escritura. Your official property deed. The signing of
the Escritura must be in the presence of a Notary official. All
parties must attend the Notary office and proof of payment be
identified before the Notary.
Legal Fees – It is important that you are aware of the approximate
costs involved prior to signing the promissory contract. Your legal
representative will be able to advise of all the costs including
land registry, notary fees, IMT tax, and their own fee (normally
1.25% – 1.75%). It is important to note that vendors are not
required to pay any part of the fees towards your purchase of their
property.
In the case of new build properties, it is customary for payments to
be made in stages as the works progress. Your legal advisor will
ensure that certificates are attained at each agreed level of
construction.
You should be aware that many of the service charges relating to
your new property are payable on a monthly basis and not charged
quarterly as in the UK.
Rates – Contribuição Predial. Payable twice yearly.
Electricity – EDP. Payable monthly.
Telephone – Portugal Telecom. Payable monthly.
Local Services – Câmara Municipal. Mains water/sewage/etc. – Payable
monthly.
House Insurance – Seguro Habitação. Payable monthly or annually