Buying property in Portugal

After making a verbal agreement to buy a Portugal property, the property lawyer should run thorough checks to ensure the title deeds and other documentation like the caderneta urbana (like an ID card for the property, defining its size, boundaries and rateable value) and the habitation license complies with all relevant building regulations, are in order.

Property buyers will need to obtain a fiscal number, and the buyer and the seller must then agree a promissory contract (contrato promessa de conipra e venda), which sets out the terms of the sale, including get-out clauses; agrees on how much is being paid and for what; and confirms purchaser’s commitment via a deposit - normally 10% of the purchase price. If a buyer break this contract the deposit is forfeited. If the seller reneges, he/she must pay the buying party twice the amount. When all the conditions set out in the promissory contract have been met, the sale can be completed, with the final deed (escritura) being signed by both parties in the presence of a notary.

Costs

Transfer tax: (IMT): a progressive tax charged at 0-8% depending on the property value
Legal fees: 1-2%
Notary/land registry fees: 2.5%
Municipal property tax: 0.2-0.5% on new properties; 0.4-0.8% on old ones, based on new rateable values which are being reset to better reflect properties’ market value after decades of under-declaration of values on title deeds for tax avoidance
Income tax on rentals: charged on a sliding scale from 18-40%, according to property value

Average prices

Two-bed flat: £179,000
Three-bed house: £414,000

Posted on: Portugal

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Buying property in Portugal

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