With the resurgence in demand within central Portugal for properties from buyers all over Europe, there has been an increase in unlicensed estate agents jumping on the bandwagon. This license is granted by the State governing body, INCI, and requires a qualification on the part of the Estate Agent before they are issued with their AMI No. It serves as a guarantee that individual Estate Agents must use certain forms of approved documentation to implement their functions in the profession.
The Licensed Estate Agent is also bonded by INCI in the form of an Insurance Cover that enables claims to be made against them in the case of any proven dispute. Once you have made a decision to purchase a property in Central Portugal, it is advisable to find a lawyer (Advogado) or solicitor (solicitadora) who you wish to deal with your purchase, of which there are many who speak English.
It is also essential that a fiscal number (numero de identificação fiscal/NIF) is obtained, this Cartão de Contribuinte is available from the local tax office (finanças). It is also necessary to have your Fiscal number to open a bank account in Portugal, for which you will also copies of your birth certificate and passport. Having decided on your purchase and put the above into place, it is then that all the official paperwork starts.
This is however something not to be daunted by and all of us here at Properties in Perfect Portugal will endeavour to make this process as straight-forward as possible. The following pages give you an outline of the due process necessary to complete all paperwork required under Portuguese law.
Once you have decided upon your purchase it is normal for a deposit of between 10% and 20% to be left and a Promissory Contract (contrato de promessa de compra e venda) signed. This is a legally binding contract between buyer and seller, prepared by a lawyer, and needs to be signed on licensed premises or in front of a notary. Upon request the contracts will be produced in English and Portuguese.
The signing of the Escitura and handing over of funds not the last job or cost before title of deed is actually passed over. Once you have signed the Notary will issue you with a stamped copy of the Escitura (it is advisable to get more than one copy at this stage). The copy will carry the seal of the Notary but should not be mistaken for a Title Deed. The property then needs to be registered on the Land Registry (Conservatoria do Registo Predial), for which there is a charge. This can also take some time to complete and be returned but under Portuguese Law you are not the legal owner of a property until the Escitura has been registered at the land registry.
Other tasks to be completed at this stage are registering with the tax office (reparticão de finanças) and all the utilities companies such as electricity (EDP), water, gas (Galp Energia) and telephone (Portugal telecom). To register all of the above you will need your tax number (Numero Fiscal de Contribuinte or NIF) obtained from the local Tax Office (Direcção-Geral dos Impostos).
IMT. Real Estate Transfer Tax.
Different rates apply for urban and rustic properties. If the value of the property purchased is below
€85,500 IMT is not payable on rustic properties. Rustic properties and Agricultural lands are there after
taxed at a flat rate of 5%.
Commercial property or land for construction is charged at flat rate of 6.5%
Offshore companies pay 15%
IMT Property Transfer Tax 2007
Value of property
Euros % of Tax
Plus Amount to deduct
Euros
Up to 85,00 1% 0
From 85,501 to 117,200 2% 865
From 117,201 to 159,800 5% 4,371
From 159,800 to 266,400 7% 7,567
From 266,401 to 532,700 8% 10,231
Above 532,701 6% 0
Example:
Price of property = €100,000 x 2% (%tax to apply) = €2,000
Deducted Value (difference) = €865
Total to be paid €2,000 - €865 = €1,135 IMT Tax
IMI. Annual municipal tax.
Varies from location. Ranges from 0.2% of value of property to 0.8%
Stamp Duty
Payable on completion, e.g. the sale and purchase deed is taxed at 0.8%
Portuguese Capital Gains Tax.
Standard rate is 25%. There is however a double taxation treaty between Portugal and the UK so the
remaining 15% is paid in the UK.
Legal Costs
The Portuguese Notary fee is normally around 1% which also covers stamp duty. The Legal fees depend
on the loan amount and purchase price. From €500.
Once you have purchased your property in Portugal the Deed of Purchase and Sale (Escitura Publica de compra e venda) is drawn up by your chosen Notary following the signing of the Promissory Contract. Prior to signing your chosen Lawyer/Solicitor should have completed all relevant checks on the property, these include;
• Are there any planning restrictions pertaining to the property that could restrict any future plans.
• Are there any outstanding charges or debts pertaining to the property? Are all utility bills and taxes paid? It is important to remember that all debts on a property are inherited by the new owner.
• Have any works or alterations been done to the property that are not registered and do not comply with the authorities or have a habitation license (Licença de Habitaçao).
• Is the vendor the legal registered owner and if more than one legal owner, have they all consented to the sale.
• Are there any restrictions on the use of the property?
• All boundaries and rights of way are clearly defined.
• Has any survey been completed to your satisfaction?
• If furniture of fixtures and fittings are included are they specified?
With all these in place the Escitura can then be signed by both parties in the presence of the Notary and balance of monies exchanged. Although most people like to be present at this time, it is possible to give Power of Attorney (Procuração) to sign on your behalf. The Notary will also make sure that all taxes pertaining to the property will also be paid at this stage.