Buying
A brief guide to buying in Portugal
Portugal has been a favourite destination for international property buyers for a number of years. The excellent climate; close proximity to the UK and rest of Europe; and the well-organised buying and selling system, makes Portugal a very attractive option.
Many buyers are looking for a holiday home, which they may let to other holiday-makers when they themselves are not using the property. A large number of buyers choose to relocate to Portugal altogether. Whatever your requirements, the Winkworth Portugal team will be able to guide and advise you throughout the process.
Our offices sell property across the Algarve and the Silver Coast. The Algarve has been popular for many years and the property prices reflect this. The Silver Coast has become more popular in recent years and many parts of the area remain unspoilt, with property prices reflecting the nature of the emerging market. You can view our vast selection of properties here on this website, or contact a member of the team to discuss your needs in more detail.
Offer accepted
When you have found the perfect property and your offer has been accepted, you will need to instruct a lawyer to handle your property purchase. Winkworth Portugal works closely with a number of English and Portuguese-speaking lawyers, who have dealt with many international property transactions. Just let us know if you would like us to arrange an introduction. The lawyer usually takes a fee of around 1.5% of the purchase price of the property.
When you have instructed your lawyer, they will start the conveyancing process by checking all the relevant documents and details are in order. These include title deeds, the habitation license and the caderneta urbana, which details the size of the property and its boundaries, amongst other information.
You may also be asked to pay a reservation fee to your lawyer at this point, although this isn’t always required. Your lawyer will also register the transaction with the local tax office and obtain a Fiscal Number on your behalf.
If you cannot be present for the signing of the contracts, you will need to appoint a power of attorney.
The promissory, or provisional, contract
The process outlined above normally takes between seven and 28 days, assuming all the information is in order. If you need to obtain a mortgage to buy the property, the timings could be longer.
The Winkworth Portugal financial services department can advise you on your financing options and help you find a mortgage, if you would like us to. You will need to set up a Portuguese bank account to send and receive funds, which we can help you with, too.
When all of the above is in order you and the vendor will sign the promissory contract. This is a legally binding contract and lists all the details of the sale. At this stage you will have to pay your deposit to your lawyer, which is normally 10% of the agreed property price. You and the vendor will agree a date for the Escritura, or the signing of the deeds, which is effectively the same as the completion stage in the UK. Promissory contract to Escritura can take as little as seven days but it is normally 30 – 60 days.
Yours and the vendor’s lawyers will use this time to check all the details of the sale and purchase and ensure that all the conditions of the promissory are fulfilled.
IMT tax
Just before you and the vendor sign the Escritura, or final deed, you will need to pay IMT tax (Imposto Municipal sobre Transações). The amount you will pay is based on a scale and is related to the value of the property you are buying. The figure you will pay also depends on whether you plan to live in the property permanently, or let it for all, or part of the year. Current rates are as follows:
IMT tax for permanent occupation, 2009*
Value of the property transaction (in thousands) |
% of Tax Plus |
Amount to deduct |
Under € 89.700 |
0% |
€ 0 |
From € 89.700 until € 122.700 |
2% |
€ 1.794 |
From € 122.700 until € 167.300 |
5% |
€ 5.475 |
From € 167.300 until € 278.800 |
7% |
€ 8.821 |
From € 278.800 until € 557.500 |
8% |
€ 11.609 |
Over € 557.500 |
6% |
|
IMT tax for non-permanent occupation, 2009*
Value of the property transaction (in thousands) |
% of Tax Plus |
Amount to deduct |
Under € 89.700 |
1% |
€ 0 |
From € 89.700 until € 122.700 |
2% |
€ 897 |
From € 122.700 until € 167.300 |
5% |
€ 4.578 |
From € 167.300 until € 278.800 |
7% |
€ 7.924 |
From € 278.800 until € 534.700 |
8% |
€ 10.712 |
Over € 534.700 |
6% |
|
*Whilst every effort has been made to ensure that the details contained in the above tables are correct and up-to-date, this information does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error or omission.
Signing the deeds - Escritura
The Escritura will be signed by you and the vendor in the presence of a notary. All the funds will be transferred and distributed accordingly by the lawyer to cover agent’s and lawyer’s fees and any taxes that may apply to the sale and purchase, amongst other possible costs. The notary will then register the sale with the Conservatória do Registo Predial (Land Registry), which records the sale price and grants full security of ownership. Once this is complete, the property is yours and you are free to move in.
