Hem utomlands

It is a straightforward process provided you stick to the letter of the law and are advised or represented only by competent and reputable specialists who are fluent in a language you understand.

- Deal with an Estate Agent who is Government Licensed (Mediador Autorizado) with Ami Number whose conduct is subject to enforced rules.

- Deal only with Lawyers and Solicitors (Advogados ou Solicitadores) who are fully qualified and whose conduct the Portuguese Law Society controls. You can give your Lawyer or anyone else a specific power of attorney to sign documents on your behalf but you should ensure that the proper steps are being taken without any undue delay. Lawyers fees are generally between 1.0 and 2.5% of the purchase price.

- Deal with a local Chartered Surveyor who can ensure the Purchaser can understand the nature of the property he is purchasing and will also highlight any likely liability for future repairs.

1. Having chosen a property, ask your representative to search the local Land Registry (Conservatoria do Registo Predial) to check that the seller (vendedor) has clear title of ownership and that no one else has rights, charges or mortgages over it. Also check that what is registered conforms to what is actually built as well as the area of land.

2. Your Lawyer will help you organise the application for a fiscal number (numero de contribuinte) at the local Tax (Financas) office as you must have one to purchase a property. All non residents will need a fiscal representative, for which there are companies that specialize in dealing with this. It will come in the form of a card which you will need for payment of annual property taxes or to open a Portuguese Bank Account.

3. Obtain the offical tax document (caderneta predial) relating to the property from the seller and check that the description of the property (number of rooms, area of the house, area of land, etc.) is the same as in the land registry.

4. Obtain a copy of the usage license (licenca de utilizacao) from the local town hall (Camara Municipal). For residential property you will need a Habitation Licence (licenca de habitacao) which confirms that the town hall has inspected the property and that it complies with the planning permission and building regulations. Non-residential licenses need to stipulate the appropriate commercial or industrial use.

Other Enquiries

There are other checks and enquiries which are strongly recommended and should be carried out, eg.:

- Ask your lawyer or Chartered Surveyor to examine the local developments planned for the area.
- Ask a Chartered Surveyor to fully survey the property.
- If buying in a development, check the regulations governing condominium charges.
This all adds to the expense but it cannot be stressed enough that in making these enquiries you will fully understand all the obligations you are taking on in making this investment. This is not your home country and things must be checked carefully; provided this is done, you will have no problems in the future.

Mortgages

A Euro mortgage can be obtained on the property that is purchased for about 75% (sometimes 85%) of the bank valuation. (Please note: As the bank valuations tend to be lower that the market value, the actual value lent does not often exceed 65% of the purchase price). Also basing a mortgage on the property in Portugal will slightly increase the registration and notary costs.
Euro mortgages can be cheaper than Sterling ones so professional advice should be taken at the time.
If one has equity in property outside of Portugal then it can be easier to raise the funds based on this. Often it is safer to borrow the funds in the currency that one earns, so that the exchange rate fluctuation won't change the monthly payments.

Promissory Contract

Have a promissory contract of purchase and sale drawn up (contrato promessa de compra e venda) to be signed by you and the seller. It should include:
- Identification of the parties;
- Identification of the property;
- Agreed terms and conditions of the contract.

You will normally have to pay the deposit of 10% to 30% of the full purchase price at this stage. The contract can be signed in front of a Notary. It is legally binding on both the buyer and the seller. If the buyer defaults he forfeits the deposit. If the seller defaults he has to pay the buyer double the deposit (or, if a clause of specific execution is included, the vendor cannot withdraw and the purchaser can legally force the vendor to sell to him).

IMT (Stamp Duty)

This is the Portuguese Purchase Tax and will need to be paid prior to completion. The amount payable varies with the value of the property and your lawyer will always advise you of this figure before you incur any expenditure. Tax apllied varies between 1% and 6% on purchases above Euros 511,000. There is also a special rate if you are a resident and if it is your permanent residence. Different percentages are applicable on land or non-residential property and in those cases it is a fixed percentage which does not vary with the price. Rural Land is 5% and for other non-residential purposes and urban land it is 6,5%.

A very important exception has been introduced to the above figures in that whenever the purchasing entity is an Offshore territory/company, the Sisa Tax percentage will always be 8% regardless of the purchase price or nature of the property.

Notary and Registration Fees

These will have to be paid by you on completion and as a rule will be approximately 1,3% of the value of the transaction.

Outstanding Annual Property Taxes (IMI)

Unpaid property taxes (IMI) attract fines but may be allowed to mount up for some considerable time without official action; so ask the seller to show proof of payment of the last five years. Any outstanding property taxes should be settled before you make the final payment (your lawyer should do this for you).

Final Deed (Escritura)

Proper title to the property comes with the final deed of conveyance (escritura) which is signed in the office of a notary. All the relevant documents have to be checked before the final contract is read aloud and, unless the buyer understands Portuguese, interpreted in the buyer language.

Registration

Finally, register the property in the name of the new owner at the local land registry. Do it without delay. Registration can take several months but its effective from the day it was applied for (you lawyer should do this for you).

After Completion

If the registered owner of the property changes in the transaction, new contracts will have to be entered into with the utilities companies for electricity, telephone, etc. These involve attendance at the relevant provider's offices and are invariably extremely time consuming. Your lawyer can attend to these transfers on your behalf for a reasonable charge. Payments can be effected in most cases by automatic bank transfer.

Rateable Value (Valor Patrimonial)

The vast majority of taxable values of properties are out of date. From the 1st of January 2004, the Local Tax Departments will be updating the values of properties and obviously this will take a long time to carry out. However, any property which was sold after the 1st of December 2003 is to be automatically revalued and the Portuguese Valuation Commissioners have advised that the new taxable value for IMI purposes will be between 80% and 90% of the property value market. The IMI annual tax applied between 0,2 and 0,5% of the taxable value.

Taxation

If you intend to become a resident in Portugal, advice should be taken from a local accountant. If you do not intend to become a resident, there are only two taxes that will concern you. Capital Gains Tax and Tax on the rental income should you decide to let your property out. Your lawyer and, if necessary, your accountant, can advise you of your future liability to any of these taxes. Note: If you are acquiring the shares of and offshore company, care should be taken as to any past Capital Gains Tax liability that the company has accrued (25%).

Wills

It is always advisable to purchasers of the property that they immediately make a Will in Portugal dealing with the assets in Portugal. If this is not done, probate in the country of residence has to be taken out then transferred and translated into Portuguese. Making a Will in Portugal will reduce the expense and avoid time delays. The Portuguese Will is in addition to and not in place of your existing Will. As from the 1st of January 2004 inheritance tax will be zero-rated for residents leaving assets to immediate relatives. The rates for non-residents will be very low and set off against any double taxation agreements in place with your home country.

Please note!  This information should only be seen as general guidance.  Since laws, taxes and fees often change, a buyer must always inform himself of the latest rules and regulations.