Buy a Property in Portugal

1. Starting point

Once found the property you want to buy, it is common to be made an offer through the real estate agent. Once the price is agreed between the two parties, you should schedule a meeting with a lawyer to guide you through the purchase process and sign a promise to buy and sell as soon as possible. The entire purchase process can take between a few weeks to a few months, depending on the will and interest of the buyer and seller and the updating of the documents.

2. Contract Promise Buy and Sell

The purchase and sale agreement is a legally bound and signed contract between the seller and the buyer. It includes the following information:

• Identification of the parties;
• Property identification;
• Payment phases;
• Standard penalty clause;
• what is included in the purchase, such as furniture etc. in the form of an attached inventory list;
• Completion date.

On the day the purchase and sale promise contract is signed, the buyer (directly or through the designated lawyer) pays the seller the agreed deposit amount (usually the amount is between 10% and 20% of the purchase amount).

The purchase and sale promise agreement protects the buyer and seller, to the extent that, if the seller gives up the contract, he is obliged to return the double deposit to the buyer, while if the buyer withdraws from the contract, the seller has the right to keep the deposit.

3. Taxpayer number or tax identification number

Before buying the property and opening a bank account in Portugal, it will be necessary to obtain a taxpayer number through the Tax and Customs Authority. To obtain this number, you will need to validate your passport and have a document proving your residence, e.g. driver's license, ID card, etc.

4. Deed of purchase and sale

The deed is the official purchase and sale agreement that can be signed immediately without the promise agreement being signed before or after. There is a period between these two contracts, which depend on the terms agreed between the two parties, however usually does not pass the 90 days.

After the contracts signed with a notary Portuguese, your lawyer will register the property on your behalf at the Land Registry Office, in the finances (Tax and Customs Authority) and will change the utility contracts (electricity, water, gas, etc.) from the former owners to your name.

5. The duties of their lawyers

According to Portuguese law, an "attorney-at-law" is known as a lawyer. It is common for the buyer's lawyer to prepare a contract of promise of purchase and sale after evaluating all legalities on the property and after being sure that the property does not have any debts, that is, ensure that there are no outstanding charges such as utilities, taxes, mortgages, condominium values, among others. Your lawyer will also help you get your tax identification number.

In the event that your lawyer has a power of attorney, he may represent you and sign the purchase and sale promise agreement on your behalf, as well as other documents that are directly or indirectly related to the purchase of the house.

After the deed is signed, your lawyer will register the property on your behalf at the Land Registry Office, finance, Tax and Customs Authority and will change all utility contracts from the former owner to your name.

6. Legal expenses

Some lawyers charge a fixed amount for their work, while others charge a percentage of the purchase price, which can go up to 1.5%.

7. Municipal Tax on Onerous Real Estate Transfers

This tax may be paid by the buyer before completion, i.e. before signing the deed €550,836.00 percentage varies on a scale of (from 1% to 8%). If the price is over €550,836.00, the percentage is fixed at 6%.  The IMT tax applied for land or property inserted in a tourist complex is always 6.5%. The IMT tax for second dwellings is higher than for permanent dwellings.

Your real estate agent and your lawyer will be able to provide you with an exact simulation.

8. Stamp duty, notary and registration fees

These amounts will have to be paid by the buyer. Stamp duty is currently 0.8% of the purchase amount and may be paid together with IMT tax or in the notary where the deed is signed.

The notarial fee varies according to the purchase amount.  Registration fees apply when the new owner is registered with the Registry office and are currently €225 (online) or €250 (Conservatoire).

9. Real Estate Agents Fees

In Portugal, these fees are usually paid by the seller.

10. Corporate property

Some properties belong to companies that offer the possibility to buy the company instead of buying the property. Most of these properties have their domicile in Delaware in the U.S.A., however some properties may also belong to Portuguese companies, but this is unusual.

The purchase of a company that is in jurisdiction with a more favorable tax regime, such as in Delware or Malta, which usually involves the purchase of "beneficial interest" in the company's shares, rather than the actual shares themselves.

In most companies are appointed shareholders who are registered as owners.

They in turn own shares or share capital to the trust of the true owner. The company's directors will also provide directors and other company officers to handle all legalities, statements and prepare accounts, which may be necessary in some legal cases.