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Buying process
Buying a property in Portugal is an easy and transparent process. Yet, as it can be very different from buying a property in your home country, it is important to know the local rules and regulations when buying a property in Portugal. Once you have found your dream property and your offer has been accepted, the buying process in Portugal has 5 important steps.
Reservation 1
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The reservation form, drafted by the real estate agent, outlines all the terms and conditions agreed during the negotiations. The form is signed by both parties. Once the reservation has been signed, the buyer is requested to transfer a reservation deposit, generally € 5,000 Euros, which is held by the buyer’s lawyer. When buying a property from a developer, you may be requested to transfer the reservation deposit directly to the developer’s company.
To proceed with your purchase, we recommend you to use the services of a qualified lawyer or solicitor in Portugal. They can perform the necessary due diligence to check the paperwork of the property and to ensure the purchase is free of debt, mortgage or other charges and restrictions.
Once the due diligence is performed and all documents are in order, the buyer’s lawyer will draft a Promissory Contract. This contract contains all terms and conditions, agreed by both parties, relating to the purchase. Together with the signing of this contract, the buyer pays a deposit to the seller, generally 10% of the purchase price, via the client account of the buyer’s lawyer. With signing the Promissory Contract and paying this
Lawyer 2
CPCV 3
deposit, the purchase and sale of a property in Portugal is official concluded. When buying an off-plan property or a property in the construction phase, the payment on a Promissory Contract may be different.
Final deed 4
The final deed (named “Escritura”) is the contract that transfers the title of the property from the seller to the buyer. This final deed of conveyance is signed by both parties (or their representatives) in front of a public or private notary. At this point, the remaining amount is paid to the seller.
Registration 5
Once the final deed has been signed, the property has legally changed ownership, but the property still needs to be registered with the Land Registry office (named “Conservatoria do Registo Predial”). This task can be done by the buyer’s lawyer. The change of name on all utility bills is also often done by the buyer’s lawyer.
Buying costs
When buying a property in Portugal, the following one-off taxes and buying costs are applicable:
IMT - “Imposto Municipal sobre Transmissões” Municipal PropertyTransfer Tax This tax is to be paid by the buyer, at the tax department before the signing of the final deed at the notary. The IMT rate for properties varies according to the purchase price and purpose of the property and usage by the owner. ~ For properties classified as a residence, the rate goes up to 6% and 7.5% for properties valued over EUR 1 Million. The rate varies also according to the purpose of the purchase, whether it’s a second home or primary residence. ~ Rural land has a rate of 5% ~ Properties classified for tourism and other property types have a rate of 6.5%
Stamp Duty - Imposto de Selo This tax is 0.8% of the purchase price. When buying with a mortgage, another 0.6% has to be paid over the value of the mortgage.
Lawyer’s fee Most lawyers will charge 1% + VAT of the purchase price. The lawyer will carry out all the necessary searches and prepare the documentation needed for both the Promissory Contract for purchase and sale, as well as the final deed.
Notary and registration fees This will have to be paid by the buyer when signing the final deed of conveyance. These costs are around € 950. When buying with a mortgage or requesting extra services from the notary, the costs will go up.
Agency’s fee The seller pays the agency involved.
EXAMPLE
When buying a second home in Portugal for the price of € 380,000, classified as a holiday home and with no rural land involved, the total purchase costs are: IMT: € 19,364.75 Stamp Duty: € 3,040 Lawyer’s fee: € 4,674 Notary & registration fee: € 950 Total purchase costs: € 28,028.75 (= 7.3% of the purchase price)