Portugal has a healthy economy not prone to property price fluctuations. The robust property market has been protected by strict planning regulations set out in 1991, which guard against over-construction and provide in-built environmental prioritisation.
Find below the procedure of buying a property in Portugal:
Determine your budget
Speak to an estate agent to understand your options when it comes to financing. Our financial advisors can help to clarify exchange rates and currency risk in the market, as well as give you more information on the property buying procedure in Portugal. If you are purchasing remotely, you may need to pay the deposit from abroad. Make sure to get the best deal on any international money transfer, especially if you’re transferring money from one currency to another – don’t get bitten on the exchange rate.
Get a fiscal number (Numero de Contribuinte)
In order to purchase a property in Portugal, you must have a fiscal number, which can be issued when opening a local bank account, or through the local tax office. It’s very important to review the official tax and registration documents for the property, these will reveal is there is any debt attached to the property.
Portugal Property Purchase Procedure: two main steps:
1. Promissory contract (Contrato de Promessa de Compra e Venda)
This is an agreement between the buyer and seller. Any conditions attached to the sale should be listed here. A deposit, normally 10%, is set down at this point to secure the property. Searches will be carried out to determine the property title. In case of default, the buyer would lose the deposit, and the seller would have to pay double the deposit.
2. Final deed (Escritura Publica de Compra e Venda)
At this point the contract is signed by both parties (witnessed by a notary) and ownership is transferred. The property transfer tax and stamp duty are due, and the contract is submitted to the Land Registry.
Other costs when purchasing a property in Portugal
You should budget 5-10% on top of the purchase price to cover any additional costs that come with purchasing a property.
- Property purchase tax known as IMT (Imposto Municipal sobre Transmissões) which can be 0-8% based on value
- Notary fees 1-2%
- Stamp duty 0.8%
- Legal & notarial fees 1-2%
- Wealth tax 0.7% for property over 600k, 1% for property over 1mil. This is a joint allowance, so couples increase the threshold.
- IVA (VAT) of 23% on buying a newly built property (this might be included in the purchase price)
Agency fees are the responsibility of the seller.
Are you considering a property purchase in Portugal? We can help you find the right place and guide you through the process. Get in touch with us today to start your adventure!