Luxury Property & LifeStyle

Buying Process and Taxation

Buying Process and Taxation

GUIDE TO THE BUYING PROCESS & TAXATION

* Before purchasing a property in Portugal (or opening a bank account), you will need a fiscal(tax) number (Numero Fiscal de Contribuinte). This can be applied for and immediately received at your local Tax Office (Repartição de Finanças). You need to provide your residency/identity card or passport and an address in Portugal to which the Tax Office can send your fiscal card (Cartão de Contribuinte). If you do not have a Portuguese address you will normally be able to use that of a solicitor, estate agent, or friend.

* Deal with estate agents who are government licensed; they must be identified by a number AMI –Nr. and lawyers or with solicitors who are fully qualified for their services. They charge from 1 to 1,5% of the value of the transaction for their services. We are happy to provide recommendations of local English speaking lawyers if requested. Luxury Property will handle all necessary paper work documents for free to our clients.

* Promissory contract (Contrato promessa compra e venda ). Once you find a property and have your offer accepted, the next stage is usually for both parties to sign a promissory contract - in this document you promise to buy the property and the owner promises to sell it to you at an agreed price and within an agreed timescale. At this point you will pay a deposit (between 10% - 20% of the purchase price) and agree on a date (anything up to 6 months) by which to complete the purchase. This contract must obviously be signed by the buyer and seller and it must indicate reference to the legal documents explained below and detail the terms in which the transaction will completed and conditions of sale. Portuguese law protects both parties; if the buyer does not proceed with the purchase he may lose the deposit, if the seller changes his mind he has to return double the deposit amount to the buyer or can beforced to complete. It is not necessary to have the contract drawn up by a solicitor but we would recommend that you do so.

* Completion of Sale (Escritura Publica de Compra e Venda). To complete the purchase, the owner, buyer or solicitor must make an appointment with the Notary. All parties involved in the purchase/sale must attend at the Notary’s office, (unless you have granted someone Power of Attorney to act on your behalf, see below). The deed of purchase and sale (Escritura Publica de Compra e Venda) will be read out and then signed by all. Now the balance of the purchase price has to be paid. The property is now yours and the notary will proceed with the registration of the property in your name.

NECESSARY DOCUMENTS

Property Tax document (Caderneta Predial ) Property Tax document (Caderneta Predial ) At the local Tax Office (Repartição de Finanças) obtain the official Property Tax document which certifies the inscription of the property for fiscal (tax) purposes. It details the owner and their fiscal number, a description of the property (areas, number of rooms, area and type of plot, history etc), it also identifies the property with a unique reference number and states how much the owner will pay in local yearly taxes (IMI). This document is necessary for the transaction of the property. If the property is new a temporary form will be used which will be replaced by the the official document when it is issued.

Property Registration Certificate. (Certidão de Teor) At the local Land Registry Office(Conservatória do Registo Perdial) check the seller has ownership of the property and no one else has those rights, also check it is free of charges and mortgages. A Registration Certificate should be issued, it describes the property’s legal history and is necessary for the deed in the Notary as proof of ownership and power to sell.

Habitation License ( Licença de Utilização ) Obtain a copy of the usage license in the local Town Hall (Câmara). In this document you can check if the property is approved for the purposes of the original building permission. For a residential property it is necessary to have habitation license, for non residential properties a commercial or industrial license is required. This document also must be present for the signing of the deed in the presence of the Notary.

Personal Fiscal Number ( Numero fiscal de contribuinte ) As a future owner of a Portuguese property you will need to have Portuguese Fiscal Number which can be obtained immediately on a Local Tax Office.

Confirmation from the tax department (Finanças) confirming that all IMI (annual council tax) has been paid. Important as any outstanding IMI tax will stay with the property and be the responsibility of the new owners.

Proof of payment IMT, this is the Property Transfer Tax (formerly SISA Tax)

Identification documents and tax numbers of the owners and buyers.

Power of attorney and the representative’s identification document and tax number, if applicable.

IF THE SELLER IS A COMPANY YOU ALSO MUST PROVIDE:

Certidão Comercial, issued by the (Conservatória do Registo Comerciall) which identifies the partners as well as what powers they have in the company.

Identification documents and tax numbers of the company partners/owners.

Power of Attorney from the other partner to the one signing the deeds, if applicable.

PROPERTY TRANSFER TAX - IMT ( IMPOSTO MUNICIPAL sobre TRANSMISSOES) has to be paid before you complete the sale and proof of payment must be shown to the Notary. IMT for land (prédio rustico) is 5%. Is a property sold, which serves no residential purposes, eg an office building its a fixed rate of 6.5%. IMT on other properties is based on a sliding scale depending on the value of the property.

Blacklisted Offshore companies have to pay 10% IMT of the purchase price.

 

STAMP DUTY ( Imposto de Selo), is calculated in relation to the acquisition price and paid before completion, when the IMT (transfer tax) is due. The rates for 2013 are as follows: Property: single rate of 0,8% on the declared value. Mortgage: Single rate of 0,6% on the value of the mortgage

ANNUAL COUNCEL TAX - IMI, is payable by property owners. The tax is calculated in relation to the tax value of the property (Valor Patrimonial). It is paid yearly, in one or two installments. The rates may vary depending on the location of the property. Rustic Property: 0,8%. Urban Property: between 0,5% and 0,8%. Urban Property ( value assessed after 2004): between 0,3% and 0,5%. Blacklisted Offshore: 7,5%

FEES
You have to calculate legal and registration fees for the deed and bank charges for the mortgage. A lawyer will normally charge between 1 – 1,5% percent of the purchase price of the property, min 2.000 €. We can provide you with an English speaking lawyer. The Notary and deed registration fee will be max. 1,000€.

PAYMENTS FOR YOUR PROPERTY
It’s beneficial to open a Portuguese bank account to pay for the purchase of property, taxes, solicitors, etc. and utility bills, etc. that you will need to pay when owning a property abroad. Whilst every effort has been made to ensure that the details contained herein 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.

Share this article: