Buying real estate in Portugal

When you have found your property, the Vendor or their legal representative will obtain a certificate (Escritura) from the local Land Registry confirming that the property is available to sell. This document will need to be produced to the Notary at the time of signing the contracts.

If the full purchase price is being paid immediately, a purchase contract will be drawn up by the Vendor's legal representative, covering the details of the contract, purchase price and date of completion. At the time of signing the contract, the Purchaser will pay a deposit usually about 10% of the agreed purchase price. If the purchaser should withdraw from the contract this deposit will be forfeited, whilst if the vendor should withdraw they will be obliged to forfeit double the value of the deposit.
Solicitor / Lawyer

The conveyancing (Escritura) will check that any searches and other legal requirements have been carried out, funds prepared and that both parties can agree a completion time. The transfer of title will then be prepared and will be signed by both parties or by their solicitors/lawyers, in the presence of a notary. The balance of the purchase money can then be handed over. The contract will be retained by the notary and a copy registered with Public Records. You will then have to arrange for registration with the Land Registry which ensures your proof of legal ownership and the Inland Revenue will also be notified for your property and rating taxes. Prior to buying your property you should apply for a tax number.

Fees

This will usually be a total of about 15% of the purchase price, slightly less for countryside property. The costs include Solicitor/Notary fees, Stamp Duty and Transfer Tax (SISA ) when buying real estate in Portugal.

Property Tax

Property Transfer Tax (SISA), is payable when the registered owner of the property changes in Portugal and is currently under review. The rates where:

0% to €80,000
2% - 6.5% thereafter
5% for land

A municipal tax is levied by reference to the ratable value, from 1%. For offshore companies the rate is now 2%. From 1st January 2004 this will rise to 5%. Buying a property using real estate holding companies is a popular tax efficient method of investing in a second home. It can allow buyers to minimise property transfer taxes and avoid capital gains on sale and inheritance tax in the event of death.

Mortgages

You can borrow against property from a Portuguese financial institution although it can be difficult should it be for a second home by other non-Portuguese nationals. If the property is being purchased through a Gibraltar offshore company you could use a bank based there who would generally advance up to one half of the purchase price, subject to status. These mortgages can usually be arranged in most of the major currencies over terms up to a possible maximum of 20 years.