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Here are the basic steps to help understand the procedures
and legal acts that are involved in acquiring a property
in Portugal. It is always recommended that qualified legal
advice be sought in any purchase.
Use a Government Licensed Estate Agent.
This license is granted by the State according to a
number of required qualifications on the part of the
Estate Agent. It mainly serves as a guarantee that any
individual Estate Agent must use certain forms of approved
documentation to implement his functions in his profession
and provide all necessary documents relating to the
property in consideration. The Licensed Estate Agent is
also bonded by the State in the form of an Insurance Cover
that may be claimed against in the case of proven dispute.
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 legalized 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 relating to
this act that a Lawyer will be able to explain.
It is often found practical for the buyer to appoint a
third party such as their Lawyer to act for them legally
in the matter. A document named "Procuração
Publica" is prepared with the necessary details
and then in the Notary Office this document is signed by
the person(s) granting the "Power of Attorny" and
registered by the Notary. This official document can
also be created in the Portuguese language outside
Portugal in a Portuguese Consul in a foreign country, or,
in a Notary in the language of the country concerned. In
the case of the latter the document must have the Seal of
the Notary and an Apostil attached. An official
translation into the Portuguese language will later be
necessary.
Every buyer is required to obtain a Fiscal Number from
the local Tax Office (Finanças).
Prior to act of purchase, the purchase will be subject
to a Municipal payment named "IMT - Imposto
Municipal sobre Transamissões" which as from
the 1st of January 2003 replaced the previous tax payment
named "SISA". This payment is paid in
the local Tax Office nearest to the property. The amount
to be paid is related in terms of percentage by
"platforms" to the cost of the property being
purchased. In limited cases the buyer will be exempt
from paying this Tax.
| Value of Property |
Percentage Applied |
Deducted Value |
| Up to € 85.500,00 |
1% |
€ 0,00 |
| € 85.500,00 until € 117.200,00 |
2% |
€ 855,00 |
| € 117.200,00 until € 266.400,00 |
5% |
€ 4.370,00 |
| € 159.800,00 until € 266.400,00 |
7% |
€ 7.567,01 |
| € 266.400,00 until € 511.000,00 |
8% |
€ 10.231,09 |
| Superior to€ 511.000,00 |
6% |
€ 0,00
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Example:
Price of property = € 100.000,00 x 2 % (% tax to apply) = € 2.000,00
Deducted Value (difference) € 855,00
Total to be Paid = € 2.000,00 - € 855,00 = € 1.145,00 IMT Tax
Commercial and building plots: pay flat rate of 6,5% of IMT Tax
Rustic and Agricultural lands: pay flat rate of 5% IMT Tax
When buyer is an Offshore company, Tax to be paid is flat rate of 15%
When all the above requirements have been completed
the act of sale can proceed in any Notary Office.
This act is known as the "Escritura de
Compra e Venda" which takes place in front
of the selected Notary and is recorded in his
official books. The Notary will check prior to the
act of sale that all the necessary documents are
correct to ensure that the sale can proceed
according to the facts provided. It is at this
moment that payment is normally completed to the
seller, and when applicable, the balance of purchase
has to be made according to the signed Contract in
Point 2 above. After the act is recorded the Notary
Office will issue an official photocopy of the entry
which is the proof to the buyer that the act has
officially taken place. The photocopy will carry the
seal of the Notary but as further official copies
can be requested at any time this document should
not be mistaken for a "Title Deed" -
as known in the UK.
Stamp Duty
A Tax is levied on all documents, books, papers,
acts and products listed in the General Schedule
Stamp Duty Schedule and is determined by the value
of the act, or, contract. A property purchase is
subjected to a Stamp Duty of 0,8% of the declared
value.
On completion of the above Notarial act the
property in question has then to be registered in
the new owners name in the Land Registry
(Conservatoria do Registo Predial). This
registration is not obligatory until the owner
wishes to sell the property However, it is
strongly recommend that this registration is made
immediately after the Notary act as a preventative
measure against a possible financial abuse by the
previous owner.
Every year the owner of any property is subject to
pay an annual Tax named "IMI" (formerly
know as "Contribução Autarquica"),
which can be related to the UK word "Rates".
This charge is levied each April relating to the
previous year and if the amount exceeds €250.00
then it will be divided into two equal bills, the
first for payment in April, and the second, for
payment in September. It is most important to pay
this charge as the failure for doing so eventually
results in the property being placed for sale on
the market by the State and goes to the highest
bidder.
IMI - (Imposta Municipal de Imóveis)
This is a municipal tax is levied on the taxable
estate value on all properties located in Portuguese
territory. The taxable person is the named owner
of the property, usufructuary and surface rights
holder, as on the 31st of December of the year in
which the tax is related.
The IMI Rates are calculated on the following
basis: for Rural properties 0,8%; for Urban
properties-between 0,2% to 0,5% (variable from
council to council and reviewed annually)
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Buying & Selling Legal Info
