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:

First the buyer and seller sign a Contrato de Promessa de Compra e Venda (Promissory Contract similar to exchange of contracts in the UK). Usually a minimum 10% deposit is required at this stage which is binding on both buyer and seller and states all of the terms and conditions agreed, such as price, payment conditions and completion date. If the owner of the property is a corporate entity and the property is staying in a corporate entity then your lawyer will have to do searches on the company and subsequently draft a Share Purchase Agreement instead of a Promissory Contract.

Buyers taking out a mortgage when buying property in Portugal will have a provisional registration done at the land registry in the bank's favour. This is done to protect the bank and the buyer.

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.
• 9. When buying property in Portugal you must also pay IMT (a property tax). This tax goes up in platforms in accordance with the value of the property and it also differentiates between main and second homes. You can see examples of typical IMT scales for mainland Portugal here.
  If you are buying property in the Azores or Madeira please consult the IMT scales here

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).

Offshore Purchase 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. This is usually done privately by signing a Share Purchase Agreement (SPA). Delaware and 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.

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%-6.5%

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.