Buying Process in Portugal
INCI is responsible for granting the AMI license and requires qualification on the part of the Estate Agent before they are issued with their AMI No. It guarantees that individual Estate Agents must use certain forms of approved documentation to implement their functions in the profession.
INCI also bonds the Licensed Estate Agent in the form of an Insurance Cover that enables claims against them in the case of any proven dispute. Once you have decided to purchase a property in Portugal, it is advisable to find a lawyer (Advogado) or solicitor (solicitador) whom you wish to deal with your purchase, of which many speak English.
It is also essential that a fiscal number (numero de identificação fiscal/NIF) is obtained, this Cartão de Contribuinte is available from the local tax office (finanças). It is also necessary to have your Fiscal number to open a bank account in Portugal, for which you will also need copies of your birth certificate and passport. Having decided on your purchase and put the above into place, it is then that all the official paperwork starts.
Do not be daunted. We here at PPProperty will endeavour to make this process as straightforward as possible. Read on for an outline of the steps necessary to complete all paperwork required under Portuguese Law.
THE PROMISSORY CONTRACT.
Once you have decided upon your purchase, it is normal for a deposit of between 10% and 20% to be left, you should use an International Money Transfer Expert for your payments to protect your
property costs against currency volatility and a Promissory Contract (Contrato de promessa de Compra e Venda) signed. This contract is legally binding between buyer and seller, prepared by a lawyer and often written in two languages, with Portuguese prevailing as the legal requirement.
THE PROMISSORY CONTRACT INCLUDES;
- The identification of both parties.
- The identification of the property, Article number.
- Confirmation of clear title.
- The price agreed between buyer and seller is also included.
- The deposit amount.
- The date of the deadline for signing the Final Deed (Escitura) will be in the contract.
- Use of property in the interim period if required. Once the Promissory Contract has been signed, and the deposit paid, should the seller default, they must repay twice the deposit amount to the buyer. If the buyer defaults, they would also lose their deposit.
THE ESCRITURA IN PORTUGAL
Before signing, your chosen Lawyer/Solicitor should have completed all relevant checks on the property, these include;
- Are there any planning restrictions on the property restricting any plans?
- Are there any outstanding charges or debts on the property? Are all utility bills and taxes paid? It is important to remember that the new owner inherits all debts on a property.
- Have any works or alterations been done to the property that is not registered and does not comply with the authorities or has a habitation license (Licença de Habitaçao)?
- Is the vendor the legally registered owner, and if there is more than one legal owner, have they all consented to the sale.
- Are there any restrictions on the use of the property?
- All boundaries and rights of way are clearly defined.
- Has any survey been completed to your satisfaction?
- Are any furniture, fixtures or fittings included, are they specified?
Now the Escritura can take place in the presence of a Notar or the office of a Lawyer.
Although most people like to be present now, it is possible to give Power of Attorney (Procuração) to sign on your behalf. The Notar or Lawyer will check outstanding taxes.
The signing of the Escitura and handing over of funds is the last stage. Once you have signed, the Notary will issue you a stamped copy of the Escitura (it is advisable to get more than one copy at this stage). The document will carry the seal of the Notary but should not be mistaken for a Title Deed.
The property then needs to be registered on the Land Registry (Conservatoria do Registo Predial), for which there is a charge. This process can also take some time to complete, but under Portuguese Law, you are not the legal owner of a property until the registration of the Escitura.
Other tasks to be completed at this stage are registering with the tax office (Autoridade Tributária) and all the utility companies such as electricity (EDP), water, gas (Galp Energia) and telephone (Portugal telecom). To register all of the above, you will need your tax number (Numero Fiscal de Contribuinte or NIF) obtained from the local Tax Office (Autoridade Tributária).
Taxes and costs in Portugal
First Permanent Residence In Portugal
The first table applies to the purchase of property intended for permanent residence. Real estate not exceeding 92,407 Euros is exempt.
Table For "Imt" Permanent Residence
|Value Of Property Liable For IMT||
|Up until 92.407||
|From 92.407 up until 126.403||
|From 126.403 up until 172.348||
|From 172.348 up until 287.213||
|From 287.213 up until 574.323||
|More than 574.323||
SECOND PROPERTY OWNED
|Value Of Property Liable For IMT||
|Up until 92.407||
|From 92.407 Up until 126.403||
|From 126.403 Up until 172.348||
|From 172.348 Up until 287.213||
|From 287.213 Up until 550.836||
|More than 550.836||
|Value of Property Transaction||Tax Percentage|
|Rustic & Agricultural Plots||5|
|Other Property % Urban Plots||6.5|
|Blacklisted Jurisdictions Offshore||10|