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Once you have found your new property, the next step is to engage the services of a local lawyer to represent you in the purchase. It is also a good idea to familiarise yourself with the basic legal and tax issues involved. Power of AttorneyYour Portuguese lawyer will need a power of attorney (Procuração) to be able to act on your behalf. If you are staying in Portugal, this can be registered at the Notary Office. Otherwise, it can be prepared by the Portuguese Consulate in your country of residence, or by a local notary. In this case it must be accompanied by a Notary Certificate of Apostille of the Hague Convention and translated into Portuguese. If you are buying through an offshore company, then the offshore administrators should provide the requisite power of attorney. Fiscal Number All buyers, whether individual or corporate, must obtain a fiscal number from the Tax Office (Finanças). Search - All urban properties have a Caderneta Urbana from the Tax Office (Finanças). The caderneta is like an identity card for the property. It gives the article number, size and location of the plot; it defines the borders of the plot, and gives a rateable value for the property. This “valor patrimonial” is the property value on which the annual rate (contribuição autárquica) is based. This value is normally much lower than the real value of the property. Generally, when purchasing a property, it is advisable to do a search in Finanças as well as in the Conservatória, as there may be actions pending against the property not yet advised to the Conservatória.
- All residences must also have a Habitation Licence (Licença de Habitação) issued by the local Town Hall (Câmara Municipal).
Promissory contract The next step is for both parties to enter into a Promissory Contract of Purchase and Sale (Contrato de Promessa de Compra e Venda), which is legalised at the Notary Office. The buyer will pay a percentage of the total purchase price and the parties will agree with the Notary to record a date for completion of the purchase.
If the seller withdraws from the sale, the seller is then required by law to repay twice the deposit. Likewise, if the buyer fails to complete the purchase, then the buyer forfeits the total of the deposit. IMT (Imposto Municipal sobre Transmissões Onerosas de Imóveis) Property Transfer Tax
This is now known as IMT, having replaced SISA tax on 1st January 2004. As of 1st January 2007 there are two separate rates to be applied, depending on whether you are buying a property for permanent living or a second or holiday home.
| IMT table for 2007 | | For permanent residents, the following table applies: | | Value of Property | Rate to apply | Deduction | | Up to €85,500 | 0 % | Nil | | €85,500 - €117,200 | 2 % | €1,710 | | €117,200 - €159,800 | 5 % | €5,226 | | €159,800 - €266,400 | 7 % | €8,422 | | €266,400 - €532,700 | 8 % | €11,086 | | €266,400 - €532,700 | 6 % | Nil | | * For example, if the purchase price is €150,000, the formula is: €150,000 x 5% = €7,500 less €5,226 = €2,274 | | | | However, for clients buying a holiday home, this table would apply: | | Value of Property | Rate to apply | Deduction | | Up to €85,500 | 1 % | Nil | | €85,500 - €117,200 | 2 % | €865 | | €117,200 - €159,800 | 5 % | €4,371 | | €159,800 - €266,400 | 7 % | €7,567 | | €266,400 - €532,700 | 8 % | €10.231 | | Over €532,700 | 6 % | Nil | | * For example, if the purchase price is €150,000, the formula is: €150,000 x 5% = €7,500 less €4,371 = €3,129 | | | Exceptions:
• Other urban property, such as building plots or land to build an urban dwelling: 6.5%
• Rustic property (agricultural land): 5.0%
• When a company listed in one of the black-listed jurisdictions acquires a property in Portugal: punitive tax rate of 15%. (Note that if a company listed in a white-listed jurisdiction acquires a property, the same rates apply as shown in the table above) | Deed of Purchase and Sale Once other formalities are completed, the sale can proceed with the Deed of Purchase and Sale (Escritura Pública de Compra e Venda), which is executed before a Notary and officially recorded. At the same time the balance of the purchase price is paid according to the terms of the Promissory Contract. Registering ownership Upon presenting proof of the “escritura” to the “Conservatória do Registo Predial”, the property can then be registered in the name of the new owner.
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