THE BUYING PROCESS IN PORTUGAL This page is intended to help you understand the process of buying a home in Portugal, to explain the terminology you will encounter and to give an indication of the obligations of overseas home ownership.No Permission NeededGenerally, no special permission is required to buy a property in Portugal (unless it is in a monument or a sensitive military area).The Importance of a Portuguese LawyerAs the Portuguese legal systems is different to Britain's and Ireland's, your lawyer will make checks and enquiries on your behalf, the whole process is little more troublesome than the buying and conveyance a property in the UK or Ireland. Amongst other things, the lawyer will check that the vendor has true title to the property, that the property is free of any liens or mortgage and that the contractual documentation is fair and reasonable and that the vending company is of good standing.
Problems can arise when prospective buyers decline to use a lawyer and later find legal complications, which affect their ownership rights. For this reason we insist that clients take legal advice before buying. We can arrange for you to see English speaking Portuguese lawyers.Fiscal RepresentativeUnder Portuguese law any non Portuguese, non resident purchaser of property in Portugal must appoint a Fiscal Representative in Portugal. The Fiscal Representative will arrange your Portuguese Tax Number (needed for the purchase) and manage any taxation liabilities that you may have in Portugal on an ongoing basis. This covers such things as Council Tax, Income Tax in the event of rentals and Capital Gains Tax in the event of future sale. Your lawyer should be able to recommend a specialist in this area to you.Checking it OutHaving instructed a lawyer to handle the purchase, you have the reassurance that all the important aspects will be covered.
1. The title of the property is checked.
2. The person selling the property actually owns it.
3. Whether there are any charges on the property.
4. Building licenses and permissions are in order, where applicable.
5. The terms and conditions stipulated by the seller are checked for fairness.
6. A report of the findings is then compiled for you to consider, before proceeding with the signing of Promissory Contracts
After the signing of the contracts your lawyer will then arrange:
1. The transfer of the title into your name.
2. For any fees and taxes to be paid.
3. For the title in your name, to be registered in the Local Land Registry.Registering Your PropertyAfter the signing of the Escritura, your lawyer takes it to the Local Land Registry for registration and payment of registration fees. The registration process can take several weeks; your lawyer will handle this. The Name on the DeedsYou should decide whose names are going to be registered as the final owners of the property before contracts are signed as there could be tax implications if you decide to change this between the signing of contracts and the Escritura. Inheritance tax and change of ownership taxes and fees may be levied when your property changes hands in the future. It is therefore advisable to take this into account during the purchase process purchase. Your lawyer and Fiscal Representative can help you with these decisions.
All about Money
Financing your purchase. Many people buy properties without the need to raise finance from a third party. However, you may wish to obtain a mortgage on the property you own in Britain or Ireland. We can give you advice and assistance in obtaining finance either in UK or Ireland. Additionally we can recommend Portuguese banks that specialise in offering mortgage facilities to foreign purchasers where the only security required is the property or property "to be built" in Portugal.
Transferring money to Portugal. There are no restrictions in transferring money in or out of Portugal. It is always best to transfer sterling and exchange it in Portugal. At a later date YOUR Fiscal Representative can help you open a bank account in Portugal. In the meantime any transfers associated with the purchase should be remitted to your lawyers Client's Account. A Guide to the CostsLawyer's fees will vary from practice to practice, usually between 1% and 2% of the value of the property. Their services include, advice about contracts - investigation of the title - planning permission status - reporting about enquiry results - exchange of contracts and completion, and notary attendance.
We have agreements with several lawyers that take 1.250 Eur., to give all the needed assistance.Other CostsNotary and land registry fees around 1,5%
IMT Tax (Stamp Duty) 6,5% on any land purchase
IMT Tax (Stamp Duty) between 6% and 0% based on a sliding scale depending on the sale price of apartment, townhouse or completed villa purchase.
Annual Council Tax. Charged at up to 0.8% of the Local Authority valuation of the propertyLiving and Working In PortugalShould you decide to live or work in Portugal you will require a Residency Permit and various business licences. You may have to consider importing a car, furniture, or pet, as well as payment of pension, National Insurance and other related matters. We can help you with this.Ongoing Commitments and ObligationsIf you spend less than 6 months per year in Portugal then you are classed as non-resident. However you are obliged to:
Appoint a Fiscal Representative in Portugal who will take care of paying your local annual property taxes (Council Tax) and paying any applicable taxes on income derived from activities in Portugal, including that derived from renting your
property.
Insure your property and contents. Additional liability insurance cover, if the property is to be rented out.
Pay car taxes and insurance where applicable
Pay electricity, water and other bills.
If you spend more than six months a year in Portugal you are deemed a permanent resident and would be expected to pay taxes and social security contributions.
Many of the above points are requirements and income tax will usually be assessed on your worldwide income. It is common practice for foreigners living in Portugal to employ the services of an accountant or ”gestor” to advise on this.
You should consider taking out Private Medical Insurance with a company that has agreements with Portugal. We can help you with this.In The Event of DeathJointly owned property does not automatically pass in full to the surviving spouse or partner, but is dealt with according to the wishes expressed in a will, or under the rules relating to intestacy. Whilst it is not compulsory it is much cheaper, quicker and more straightforward to make a will in Portugal. Further Recommendations You Should ConsiderReview your will.
Give an Enduring Power of Attorney to a member of your family or a lawyer to deal with your affairs should you become incapable.
Nominate a Fiscal Representative to receive your tax and fiscal correspondence if you are not registered as a permanent resident in Portugal.
Insure your property, contents and health.
Have all service charges transferred to your name, open a bank account and register for taxes. All this we can help you with.The Next StepThis is just a guide to buying a property in Portugal. Though the matters themselves are sometimes more involved than indicated here, the whole process is usually smooth and trouble free.Unfamiliar TermsESCRITURA - The Title Deed, proving who the owner is as well as describing the property in detail. In the case of a plot of land, the Escritura is only signed once you are satisfied with the preliminary investigations and arrangements for the final payment have been made. In the case of an apartment, townhouse or completed villa the Escritura is only signed after you have inspected the property and the Local Authority has issued the Habitation Licence. You will either attend the signing in person or grant your lawyer a Power of Attorney to attend and sign on your behalf. The Escritura is signed in the presence of a Notario.NOTÁRIO - His/her role is to officially certify that the title deeds have been exchanged and understood by the parties concerned. After the signing, the Notario witnesses' payment, or an acknowledgment that the payment was been made, this fact is incorporated in the title deed. The notary is completely impartial and offers no advice.Advice for buying a property in PortugalDeal only with Real Estate Agents who:
· Have an Open Office;
· Have a third party liability Insurance for any problem that occur in a purchase;
· Are licensed by the Portuguese government - They must be identified by an “AMI” number;
· Here you can confirm if the “AMI” is valid http://www.inci.ptPlease note:
· Real Estate Agents can’t make any kind of Contracts;
· Agents are not authorized to take any extra fees or costs for their service;
· Deal with lawyers or solicitors who are fully qualified for their services. You can be charged of 1% of the value of the transaction.
· We will be happy to introduce you to a reputable English speaking lawyer who will answer any legal queries you have and act on your behalf |