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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. 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
