This page describes the legal and financial details of buying a property in Portugal. The stages presented next are traditional required, all of which can be assisted by your chosen estate agent:
- Chose the property you wish to buy;
- Check all legal aspects related with the property, namely if it is correctly declared for fiscal and land records, as well as previous mortgage or other debt related impediments;
- Sign a Property Sale Agreement with the seller, CPCV, expect an advance payment of about 10%;
- Check that the owner deals with any outstanding legal matters such as preference rights, licences, etc;
- Pay the Transfer Tax (IMT – Imposto Municipal sobre a Transmissão Onerosa de Imóveis) and Stamp Duties (IS – Imposto de Selo). These taxes vary with the sale and fiscal value of the property as well as with the type and use the property;
- Sign and register the Contract of Sale (Escritura) at a notary office or at the Casa Pronta office (Ready House);
- The buyer makes the preliminary record of the property, and mortgage if there is one, and obtains the corresponding Property Certificate (Certidão de Teor). For this he must go to the local Building Record Office (Conservatória do Registo Predial) and take with him the Urban Building Certificate (Caderneta Predial Urbana), obtained at the notary.
In summary, you will need:
- An Estate Agent to help and guide you through all the commercial, legal and financial processes;
- A lawyer or solicitor to check and write the necessary documents, that can be provided by your estate agent;
- A building surveyor to determining the condition of existing buildings, identifying and analysing defects, including proposals for repair;
- A notary to write and register the Contract of Sale;
Transfer Tax (IMT)
In Portugal the Transfer Tax is known as IMT or Municipal Transfer Tax (Imposto Municipal sobre Transações Onorosas) and varies according to the purchase value and use of the property, , between 0% and 8%, see tax reference. For example, a house bought for 100k as an investment (not your main living house) would pay 1.075,93 €, i.e., about 1%, see web simulator.
This tax needs to be paid just before (the day before) the signing of the contract of sale.
The Stamp Duties are known as IS (Imposto de Selo) and represent a constant 0.8% of the purchase price, reference.
This tax also needs to be paid previously to the signing of the contract of sale.
Property Sale Agreement
A Property Sale Agreement (Contrato Promessa de Compra e Venda – CPCV), binds the parties to a future sale, and is used so that the buyer can secure the property and have time to collect the necessary funds. This contract can be written by one or both of the parties or, preferably,
by a chartered lawyer or solicitor and the buyer usually pays an advance of about 10% of the sale price.
Contract of Sale
When buying a property in Portugal there needs to be a contract of sale, known as Escritura. It needs to be signed at the notary or at Casa Pronta (fast track property service). The buyers and sellers all need to be present or represented. The total price is built by a number of parcel costs and varies between service providers, but expect it to cost about 700 €, and is paid for by the buyer. 90% of the time the Contract of Sale is precessed by Both parties commit to make the necessary preliminary registers within the time limit set in the Sales Agreement and get a Urban Building Certificate, Caderneta Predial urbana. Both buyer and seller need to be represented. The estate agent is usually also present. A bank representative must also be there if there is a past or new mortgage to consider (a past mortgage release might need to be produced by the bank representative).
The necessary documents are:
- Preliminary Record of the Property (Registo Provisório de Transmissão), from the local Building Records Office (Conservatória do Registo Predial);
- Use license (Licença de Utilização) from the local Municipal Council (Câmara Municipal);
- Buyer and seller ID documents, including VAT number;
- Urban Certificate (Certidão Matricial);
- Recent Energy Certificate (Certificação Energética), provided by a number of engineering consultants (ask your Estate Agent);
- Bank stating debt status of the property, if there is one;
Estate Agent Fees
The estate agent fees vary between 3 and 6 % of the sale price and are normally supported exclusively by the seller .
It is possible for a foreign citizen to secure a private mortgage loan at a Portuguese bank as long as he or she his prepared to finance 20% or more of the valuation price, and can make proof of his income.