This page is intended to help you understand the process of buying a home in Portugal, to explain the terminology you will encounter and to give an indication of the obligations of overseas home ownership.
The Importance of a Portuguese Lawyer
As the Portuguese legal systems is different to Britain´s and Ireland´s, your lawyer will make checks and enquiries on your behalf, the whole process is little more troublesome than the buying and conveyance a property in the UK or Ireland. Amongst other things, the lawyer will check that the vendor has true title to the property, that the property is free of any liens or mortgage and that the contractual documentation is fair and reasonable and that the vending company is of good standing.
Problems can arise when prospective buyers decline to use a lawyer and later find legal complications, which affect their ownership rights. For this reason we insist that clients take legal advice before buying. We can arrange for you to see English speaking Portuguese lawyers.
Checking it Out
Having instructed a lawyer to handle the purchase, you have the reassurance that all the important aspects will be covered.
1. The title of the property is checked.
2. The person selling the property actually owns it.
3. Whether there any charges on the property.
4. Building licenses and permissions are in order, where applicable.
5. The terms and conditions stipulated by the seller are checked for fairness.
6. A report of the findings in then compiled for you to consider, before proceeding with the signing of Promissory Contracts
After the signing of the contracts your lawyer will then arrange:
1. The transfer of the title into your name.
2. For any fees and taxes to be paid.
3. For the title in your name, to be registered in the Local Land Registry.
Under Portuguese law any non Portuguese, non resident purchaser of property in Portugal must appoint a Fiscal Representative in Portugal. The Fiscal Representative will arrange your Portuguese Tax Number (needed for the purchase) and manage any taxation liabilities that you may have in Portugal on an ongoing basis. This covers such things as Council Tax, Income Tax in the event of rentals and Capital Gains Tax in the event of future sale. Your lawyer should be able to recommend a specialist in this are to you.
ESCRITURA - The Title Deed, proving who is the owner as well as describing the property in detail. In the case of a plot of land, the Escritura is only signed once you are satisfied with the preliminary investigations and arrangements for the final payment have been made. In the case of an apartment, townhouse or completed villa the Escritura is only signed after you have inspected the property and the Local Authority has issued the Habitation Licence. You will either attend the signing in person or grant your lawyer a Power of Attorney to attend and sign on your behalf. The Escritura is signed in the presence of a Notario.
Registering Your Property
After the signing of the Escritura, your lawyer takes it to the Local Land Registry for registration and payment of registration fees. The registration process can take several weeks; your lawyer will handle this.
All About Money
Financing your purchase. Many people buy properties without the need to raise finance from a third party. However, you may wish to obtain a mortgage on the property you own in Britain or Ireland. We can give you advice and assistance in obtaining finance either in UK or Ireland. Additionally we can recommend Portuguese banks that specialise in offering mortgage facilities to foreign purchasers where the only security required is the property or property "to be built" in Portugal.
Transferring money to Portugal. There are no restrictions in transferring money in or out of Portugal. It is always best to transfer sterling and exchange it in Portugal. At a later date YOUR Fiscal Representative can help you open a bank account in Portugal. In the meantime any transfers associated with the purchase should be remitted to your lawyers Client´s Account.
A Guide To The Costs
See the" Costs" Menu in Homepage
Ongoing Commitments And Obligations
If you spend less than 6 months per year in Portugal then you are classed as non-resident. However you are obliged to:
Appoint a Fiscal Representative in Portugal who will take care of paying your local annual property taxes ( Council Tax ) and paying any applicable taxes on income derived from activities in Portugal, including that derived from renting your property.
Insure your property and contents. Additional liability insurance cover if the property is to be rented out.
Pay car taxes and insurance where applicable
Pay electricity, water and other bills.
If you spend more than six months a year in Portugal you are deemed a permanent resident and would be expected to pay taxes and social security contributions. Many of the above points are requirements and income tax will usually be assessed on your worldwide income. It is common practice for foreigners living in Portugal to employ the services of an accountant or gestor to advise on this.
You should consider taking out Private Medical Insurance with a company that has agreements with Portugal. We can help you with this.
Further Recommendations You Should Consider
Review your will.
Nominate a Fiscal Representative to receive your tax and fiscal correspondence if you are not registered as a permanent resident in Portugal.
Insure your property, contents and health.
Have all service charges transferred to your name, open a bank account and register for taxes.
The Next Step
This is just a guide to buying a property in Portugal. Though the matters themselves are sometimes more involved than indicated here, the whole process is usually smooth and trouble free.
So take the next step to owning a property in Portugal, simply contact us to discuss your needs and requirements, and/or to arrange an inspection visit.
If you are looking to buy a luxury property in Algarve at a reduced price we can help. Just send us a message and let us know your requirements about the property you are looking for.