Alcino, Wednesday, 8 January 2014
This article is part of a series of 8 articles about buying property in Portugal. The other articles in the series cover the following topics:
In today’s globalised world, owning a home abroad or starting a new life in another country has become so much more of a realistic option for some
people. There are several factors which usually influence the decision to purchase foreign property or to move to a different country and Portugal
long been a destination that has fulfilled a selection of individual requirements.
The sale of any property or land in Portugal is always governed by Portuguese law. Nevertheless, when buying property in Portugal, foreigners are
offered the same rights as Portuguese citizens. Nationals from other European Union (EU) countries can live freely in Portugal and come and go as
choose; however, non-EU citizens and residents may face restrictions on the number of days they can spend in the country each year. The government
recently made it possible to apply for visas for investment purposes, though, and this has unlocked opportunities for holders to eventually obtain
permanent residence permits for themselves and their families.
Buying property in any country has its challenges. However, there is a very clear process for buying property in Portugal and, as long as you keep
yourself sufficiently informed and seek the guidance of a good lawyer and real estate agent, the entire procedure can be completed without much
hassle. Recent initiatives for eliminating bureaucracy and simplifying conveyance have made the entire matter a transparent, safe and relatively
The legal part of the buying process in Portugal is pretty quick. Nevertheless, you should reflect on the type and purpose of property you aim to buy
(investment, holiday home or new permanent residence), planning and giving careful consideration to how you go about acquiring it.
If you require financing you may want to enquire at a variety of Portuguese banks about a mortgage. Almost all major banks in Portugal have
residential mortgage products designed for foreigners that want to buy a holiday or permanent home in the country. Make sure you account for all
expenses related with a property purchase, over and above the purchase price.
Below is a list of expenses you can expect:
- The deposit paid to the seller
- Property Transfer Tax
- Stamp Duty
- Notary and Land Registration fees
- Legal Fees
- Fiscal Representation fees
- Mortgage-related costs
The above list of costs are described and discussed in detail in the article entitled
Overall you should budget for up to 10% of the purchase price in related costs.
If you have little time and are unfamiliar with the country, it may be best to approach an estate agent to assist you in the search for the ideal
property. Estate agents are regulated in Portugal and must be licensed. Do not forget that agents make their money from commissions paid by the
seller; so study the market as best as you can, beforehand, to avoid overpaying or landing up disappointed.
Once you have your sights set on a property it would be wise to appoint the service of a lawyer to guide and represent you in the legal proceedings
and take care of all necessary background checks on the property. If possible, seek personal recommendations for lawyers, and avoid hiring someone
suggested by the estate agent, as they may be working for the vendor, and will most probably not have your best interests at heart.
In short, the competed buying process can be summed up in 10 easy steps:
- Find your ideal property
- Make an offer through your agent
- Hire a lawyer or solicitor
- Apply for a Portuguese Tax ID Number
- Make a reservation agreement
- Secure a mortgage from the bank
- Sign a Promissory Contract of Purchase and Sale with the vendor
- Pay the Property Transfer Tax and Stamp Duty
- Sign the Titled Deeds, completing the legal transfer of the property into your name
- Register the Property in your name at the Land Registry and Tax Office
The above list is described and discussed in detail in the article entitled
Once you own the property there will be ongoing costs and issues that you will need to consider. Municipal Property Tax is a yearly tax that you will
pay, based on your property’s location and its assessed Taxable Value. Most municipalities charge 0.5% of the Taxable Value. The Portuguese Tax
does not send any correspondence or bills to addresses outside of Portugal, so you may wish to appoint a Fiscal Representative to take care of this
for you. Citizens and residents of the European Union are no longer required to have fiscal representation by law, but you may want to consider it if
it would otherwise mean leaving important tax bills left unpaid and your property at risk.