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print article109-E Buying, Selling & Cost 2016

 

 

109-E  Buying & Selling a Property & Cost 2016

 

¨    The legal regulations are very specific when buying a property in Portugal; however, it is always advisable to use qualified legal advice from a lawyer, solicitor or experienced person in this field.

 

¨    It is also important to insure that any plans in the Town hall referring specifically to the property do physically agree with the existing construction. Without the approved plans in hand it is impossible to established this. Any discrepancy regarding size and outside walls should be investigated.

¨    A property for living purposes must also have the following documentation.

 

1.   A habitation licence for properties constructed after 1951 or a certificate from the local Town Hall for properties in existence from before 1951.

2.   If over the years extensions or structural alterations have taken place it is possible that there is more than 1 license.

3.   For properties which obtained a Habitation License after March 2004 also a F.T.H. (Ficha Technica de Habitação = logbook specifying all details about the building) is required.

4.   An Energy Certificate is required also even for derelict buildings.

5.   A certified insertion in the records of the Land Conservatory

6.   A detailed "Caderneta Urbana and/or Rústico" from the Tax Office

7.   A set of certified plans from the local Town council.

8.   Proof of payment of I.M.I. (Rates) of the last 5 years or a certificate proving this.

9.   In case the property has a borehole or other water source proof that there is a valid license

 

    Commercial and Industrial properties require:

 

1.   A Licença de Utilzação (utilisation licence)

2.   A set of certified plans from the local Town council.

3.   A certified insertion in the records of the Land Conservatory

4.   A detailed "Caderneta Urbana" from the Tax Office

5.   Proof of payment of rates of the last 5 years.

 

     In the case of a rural property the following extra documentation is necessary.

 

1.   A detailed "Caderneta Rústico" from the Tax Office

 

 

¨    Each Town hall and Tax Office tends to have local interpretations of the laws and regulations and these should be first checked. It is often very necessary to implement specific searches prior to acquiring a rural property.

 

¨    There are strict laws regulating Estate Agency practices and each must have a Licence granted by the State. The seller of a property normally pays commissions but it is not a controlled percentage and it is sometimes agreed upon by the leading Estate Agents in each area. On the other hand agents can of course also act on behalf of a potential buyer.

 

Here are the basic steps to help understand the procedures and legal acts that are involved in acquiring a property in Portugal. It is recommended that qualified legal advice be sought in any purchase.

 

1.     Only use a Government Licensed Estate Agent.

 

2.     It is quite normal for both Parties to initially enter into a Promissory Contract detailing the conditions of Sale - "Contrato de Promessa de Compra e Venda". This Contract is then legalised by registering it in the Notary Office. This Contract is legally binding on both sides and the law requires the seller to repay twice the deposit should he withdraw from the sale. Likewise, it the buyer fails to complete he forfeits the total of his deposit. There are specific laws on this act that a Lawyer will define.

 

3.      It is often convenient for the buyer to ask a third party who he trusts and speaks the language to act for them in the matter. A document called "Procuração Pública" is prepared with the necessary details and registered in the Notary. This can also be implemented in Portuguese Consul in a foreign country or by your local Notary after which translation into the Portuguese language can be done.

 

4.    Every buyer is required to obtain from the Tax Office (Finanças), a fiscal number N.I.P. for individuals or N.I.P.C. for companies.

 

5.     Prior to act of completion, the purchase may be subject to a payment I.M.T.  (the old Sisa" to the Tax Office).

6.    As from 2007 onwards the authorities now make a distinction between property for own and permanent living and other puchases like a foreigner buying a property for holiday purposes.

7.     In the case of residential properties the new "Tabela de I.M.T. " is now in force.

 

From Euros

Till Euros

% to apply

Amount to deduct

 

Average

Till

Π  92.407, 00

0, 00 %

0

0

Π  92.407, 00

Î 126.403, 00

2, 00%

€ 1.848, 14

0,5379

Î 126.403, 00

Î 172.348, 00

5, 00%

€ 5.640, 23

1,7274

Î 172.348, 00

Î 287.213, 00

7, 00%

€ 9.087, 19

3,8361

Î 287.213, 00

Î 550.836, 00

8, 00%

€ 11.959, 32

 

Above

Î 550.836, 00

6, 00%

0

6,0000

 

 

 

 

 

 

An example:

Suppose a property will cost Î 200.000,00 multiply by 7 %  then deduct of this amount € 9.087, 19. Total tax to be paid in this case Î  4.912, 81

 

8.    In case the property is a second home or one not for permanent living to be used by the owner

 

 

 

From Euros

Till Euros

% to apply

Amount to deduct

 

Average

Till

Π  92.407, 00

1, 00 %

0

0

Π  92.407, 00

Î 126.403, 00

2, 00%

€ 924, 07

0,5379

Î 126.403, 00

Î 172.348, 00

5, 00%

€ 4.716, 06

1,7274

Î 172.348, 00

Î 287.213, 00

7, 00%

€ 8.163, 12

3,8361

Î 287.213, 00

Î 550.836, 00

8, 00%

€ 11.035, 35

 

Above

Î 550.836, 00

6, 00%

0

6,0000

 

 

 

 

 

 

 

An example:

In this case the same property will cost Î 200.000,00 amd multiply by 7% then deduct € 8.163, 12.   Total tax to be paid Î 5.836. 88

 

On rustic land one pays a flat rate of 5%

On building plots and commercial properties one pays a flat rate of 6,5%

Off-shore companies in (black) listed jurisdiction now pay a flat rate of 8% (opposed) to 15% in 2006.

 

¨    When all the above requirements have been completed the sale can proceed with the act known as "Escritura de Compra e Venda" which takes place in front of the selected Notary oer other qualified entity and is recorded in their official books. It is at this time that the balance of purchase has to be made according to the signed Contract in Point 2 above. The Notary Office then issues normally a few days later a photocopy of the entry of this act which should not be mistaken for a "Title Deed" as known in the UK.

¨    The deeds should be signed by the buyer and seller or their legal representative(s) having a Power of Attorney to either buy or sell. If a foreigner wants to sign himself, the Notary will insists on a translator to be present. 

 

On proof of the above act the property in question is then registered in the Land Registry (Conservatória do Registo Predial), in the new owners name. It is not obligatory for this to be done until the owner wishes to sell the property; however, it is strongly recommended that this registration is made immediately as a preventative measure against possible financial abuse by the previous owner.

Also you should participate the property again in your name in the tax department.

 

Consequently all utilities like water, telephone, electricity have to be altered into the name of the new owner and of course it is advisible to take out an insurance for the property.

 

 

Additional costs for the buyer:

 

On top of the local taxes ( I.M.T.) as mentioned above one should allow for the following additional costs:

1.      Notary fees which are Approx. € 175, 00 + 0,8% Stamp duty on the amount in escritura

2.      Registration fees  Approx. € 200 or 0,50 % of the value (in fact in most cases less)

3.      Legal fees  Normally between 1-4 % of the value, this depending on the complexity of the case and the person used to represent you.

4.     Changing utilities  Depending but somewhere between Î 50,00 and Î 100,00

5.      Estate agent fees are normally paid by the seller.

6.     Removal and/or furnishing and or refurburshing.

 

 

Date Inserted: 26 December 2002
Last Updated: 13 July 2006
 
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