Buying Guide
The Buying Process
Purchasing a property in Portugal is a relatively straightforward transaction. There have been recent changes in the law so that in most cases the costs are actually lower than in recent years.
When you’ve settled on the property you want you’ll need to choose a qualified lawyer to represent you. We can provide recommendations of renowned local lawyers if required.
Power of Attorney
Once you have found a lawyer that you are happy with we highly recommend that you assign them power of attorney, particularly if you re not already resident in Portugal. This allows your lawyer to apply for the necessary paperwork on your behalf and will save you many costs in the long run. Many property deals have been lost on account of the buyer not being able to act quickly enough and this will stop that from happening.
Before contract
Prior to paying over any money or signing any promissory contract, the purchaser should instruct their lawyer to undertake thorough pre-contract enquiries. If money has changed hands it will be very difficult to retrieve it if the title is not subsequently in order.
A vendor should have a complete set of title deeds that show that the vendor is the person legally entitled to sell and that the property sold is the property the purchaser has agreed to buy.
The property should have a valid habitation license that is similar to planning permission and confirms that the local authority has approved the construction of the property. The purchaser’s legal representative will enquire and check the following:
• Land registration
• Ownership
• Title
• Description of property
• Mortgages / Encumbrances
• Related charges
• Third party interests
Caderneta Predial
Every property must have a “Caderneta Predial”. This is a taxation identification of the property that sets out, amongst other things, the rateable valuation. This valuation is important for the determination of IMI tax (rates).
Habitation Licence
All residential properties constructed after 1951 need a habitation license confirming that the local authority, the Camara Municipal, has inspected the property and that it complies with planning permission and building regulations. If the property was in existence prior to 1951 a certificate to state this must also be obtained from the Camara.
Fiscal Number (Número de contribuente)
If you are buying a property of any kind you will need a fiscal number. The process is not complicated and can be handled by your lawyer.
Survey Report
A survey report is not a legal requirement during the purchase of a property in Portugal. It is not always necessary but sometimes advisable with older properties. This will add to the general expenses but will reassure the purchaser that the property is in a good condition. A survey report is generally charged at €500.
Assuming that all of the above have been checked satisfactorily, a contract to purchase will be drawn up.
Promissory Contract
The purchaser’s legal representative will prepare a contract of purchase and sale (contracto promessa de compra e venda) to be signed by the purchaser and the vendor. This should include all relevant details of the property, the price, the payment schedules, the completion date and any special terms and conditions agreed by both parties.
At this stage the agreed deposit, normally 10% of the purchase price is paid to the vendor. The purchaser and vendor are then legally bound by the contract. There will be penalty clauses contained in this document in the event of either party withdrawing from the sale or purchase after this contract is signed.
The final deeds (Escritura)
The final deeds will be signed at the notary’s office. The balance of the purchase price is paid at this time, and the notary subsequently enters the transaction in the official records. Usually, the buyer can only take official possession after signing the final deeds of the property.
Your lawyer can sign both the promissory contract and the final deeds on your behalf, but only if they have first received your power of attorney, which is advisable to do very early on in the process to avoid you having to visit Portugal every time a signature is needed. Alternatively you can sign both documents personally.
The period of time between the promissory contract and signature of the final deeds can vary according to the wishes of the buyer and seller. This timescale is stated in the promissory contract, but usually it is 30-60 days.
Registration (Registo Predial)
After the transaction has been entered into the notaries’ records, the lawyer will take a copy of the deed and register the transaction at the land registry. This formally notes the purchaser’s legal ownership of the property.
IMT (Imposto Municipal Sobre as Tranmissões)
Formerly SISA Tax
There has been a recent change to the legislation in how the property transfer tax is now paid. The maximum rate for SISA tax was 10%. This has now been lowered to 6% on any property sold with a declared value of €500,000 and above. There are substantial deductions for properties below that value.
Below is a table showing how the new taxes will be applied:
| FromEuros | Till Euros | % to apply | Amount to deduct |
| €0 | €80,000 | 0 % | 0 |
| €80,000 | €110,000 | 2% | €1,600 |
| €110,000 | €150,000 | 5% | €4,900 |
| €150,000 | €250,000 | 7% | €7,900 |
| €250,000 | €500,000 | 8% | €10,400 |
| €500,000 | Above | 6% | 0 |
For example:
Suppose a property costs €175,000
Multiply this figure by 7% = €12,250.
Then deduct €7,900.
Total tax to be paid: €4,350.
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Notarial & Registration Fees
These will have to be paid by you on completion. As a general rule these will be approximately 1 to 2% of the purchase price. These expenses are not applicable if an offshore company owns the property.
Legal Fees
Choosing the correct legal representation to handle your property purchase matters is of obvious significant importance. It is always recommended to use a local lawyer who understands Portuguese and property law. Legal fees represent no more than 1% of the agreed purchase price.