Purchasing a property for sale in Portugal is a simple procedure and can be done in a quick and efficient way. Here I will tell you about the most important documents and actions in the buying and selling of properties in Portugal, ranging from the preparation, documents, costs and notary work and advice on financing the property.

The first thing that will happen is a verbal agreement between the buyer and the seller, directly or through a real estate agent. After a verbal agreement has been made between the vendor and the purchaser, it is followed by an examination of the title deeds and other documents by the solicitor of the person who will be buying the Portuguese property.

This is done to ensure that all the legal documents including the caderneta urbana and the habitation license are in order. The caderneta urbana delineates the dimensions, borders and chargeable price of the property for sale. The habitation license is a document that reveals if all the construction rules were followed correctly.

After this documentation is taken care of and verified, a Fiscal Number is issued by the local tax office. The next step is to draw an interim indenture between the buyer and the seller, with all the terms of the transaction written and described. After that, the buyer makes a deposit that usually amounts from 5 to 10 per cent of the purchase price of the property for sale. This is called a Contrato de Promessa de Compra e Venda, which translates to an agreement of future purchase, where both the seller and the buyer agree to deal and its terms. If either back out on the deal, the deposit is lost.

After all the conditions detailed in the provisional agreement are fulfilled, both parties sign the final agreement in front of a Notary Public. At this point the remaining sum of the property for sale is paid. The notary registers the deal with the Land Registry and records the caderneta urbana at the tax office.

Costs of Buying a Property in Portugal

When you are dealing with a property for sale in Portugal and its registration, you need to register your property with all the necessary government departments. For all these registrations you will need to pay a number of charges. To account for such expenses, you need to set your budget in a manner that accommodates an advancement of 10 to 15 percent over the cost price of the property. These fees include:

  • Transfer tax (applicable for resale properties only). This varies according to the type, size and value of the property for sale under consideration.
  • Value Added Tax (applied only on new constructions). This is typically 20 percent.
  • Notary fees. This usually is set at around 200€
  • Legal charges. This amounts to 1 or 2 percent.
  • Deed registration fee. This is normally 0.75-1 percent.
  • Contribuição autárquica is a municipal property tax that is collected on a yearly basis as per the registered value of a property and the existing local services. This amounts to 0.8 percent for properties in rural areas and for properties in urban areas this ranges from 1.1 to 1.3 percent.

Declared Values

It was a common practice in the pas to reduce the declared values of the property for sale in order to reduce the amount of capital gains tax and other charges levied in the event of a property sale.

Even now some private sellers may insist on this practice and it is not advisable and brings disadvantages on the buyer. Other than it being an illegal practice liable to rigid penalties. Even if you are able to avoid the watchful eyes of the authorities on the matter of under-declaration at the time of buying the property, it is very likely that you will be adversely affected by the difference in capital gains when you decide to sell your property.

Getting a property for sale in Portugal may look a bit confusing but the real estate agents are all very helpful an competent in arranging all the licenses and paperwork for a property investment in Portugal. If you have any questions or doubts do not hesitate to leave a comment.