Advice for buying a property in Portugal

Once a suitable property has been found, it is absolutely essential that the following steps be followed in processing the purchase:

  »  Deal with estate agents who are government licensed and who are always identifiable by an AMI number or Developers such as Algarve-Gold.

  »  Deal with lawyers or with solicitors who are fully qualified to provide advice on property transactions. Fees usually range from 1 to 3% of the value of the transaction. Algarve-Gold has associations with three approved lawyers who are always pleased to advise potential buyers.

Necessary legal documents

Power of Attorney

Your Portuguese lawyer will need a power of attorney (Procuração) to be able to act on your behalf. If you are in Portugal, this can be registered at the Notary Public.

Alternatively, it can be prepared by the Portuguese Consulate in your country of residence, or by a local notary. In this case it must be accompanied by a Notary Certificate of Apostille of the Hague Convention and translated into Portuguese.

Property Registration Certificate. (Certidão de Teor )

Prior to initiating the purchase procedure, the appointed solicitor should undertake a search at the local Land Registry ( Conservatória do Registo Predial ) to ensure that the seller has full legal rights to ownership of the property in question. The search should also ensure that no other person retains rights in respective of the property and that it is free of liens, loans, outstanding charges or mortgages.

A registration certificate should exist in respect of every property and registered in the local Land Registry. This should detail the property's legal history. This certificate will be necessary to process deed of sale in the Notary. Algarve-Gold can undertake this process on behalf of prospective buyers.

Property Tax document (Caderneta Predial )

It is also necessary to have access to the above document issued by the local tax office, (finanças) which certifies the registration of the property for fiscal purposes, identifies the property with its own unique fiscal number as well as identifying the owner and the owner’s fiscal registration number. It also includes a description of the property including plot size and type, floor areas, number of rooms, history, etc. Algarve-Gold can undertake this process on behalf of prospective buyers.

The certificate also details how much the owner will pay in local annual taxes and is required by the notary in the event of future sale of the property.

License of Use ( Licença de Utilização )

A copy of the usage license for the property should be obtained from the Local Town Hall. This will detail for what purposes and usages the property is approved in terms of the original building permission.

For a residential property a habitation license is requires and for a non-residential it is necessary to have a commercial or industrial license. The notary, in the event of future sale of the property, requires this document.

Buying and selling contract ( Contrato de Promessa - compra e venda )

This document is the effective contract of sale between the buyer and seller. As a promissory contract, it will include reference to the documents listed above, and also to the terms and conditions on which the transaction executed.

A deposit must be paid on signature of this document and varies between 10 and 30%.

Portuguese law protects both parties in to this contract:

  »  if the buyer withdraws from the purchase subsequent to the signing of this contract they shall lose the deposit paid.
  »  if the seller defaults on the contract , a sum twice that value of the deposit shall be reimbursed to the prospective buyer.

This contract will always be signed in the presence of the Notary.

Personal Fiscal Number ( Numero fiscal de contribuinte )

All owners of property and economic operators in Portugal require a Fiscal Number, which can be obtained on application to a Local Tax Office. (Finanças.)

Algarve-Gold can undertake this process on behalf of prospective buyers.

Transfer Tax ( IMT - Imposto Municipal sobre Transmissoes)

This is a tax on the sale of property and must be paid prior to issue of the Final Deed of Sale. A certificate must be issued by the Local Tax Office (Finanças), which proves payment and must be submitted to the Notary prior to completion of the Final Deed.

The value of tax due depends on the sale price the property.
Tax rates vary annually and range from 0% for properties of low value to 15% on sale value for property sold by offshore companies. Certain tax incentives, however, may be available in respect of properties owned by limited companies registered in Portugal. Algarve-Gold can provide advice on this upon request.
The value of tax applicable to each property should be verified with the Estate Agent at the time of initiating enquiries.

Final Deed ( Escritura )

On completion of the sale, the Notary issues a final deed and title pertaining to the property in question. Prior to issuing the document all certificates referred to above must be provided to the Notary.

Registration ( Registo )

Finally, on completion of the sale, it is very important to ensure that the property is immediately registered in your name at the (Conservatória do Registo Predial ) and also in the Local Tax Office (Finanças).

Disclaimer: This document has been produced only as a guide. All information presented is general in nature and should be considered as advisory only. All prospective purchasers should engage their own lawyer and verify all legal terms and conditions through their lawyers prior to initiating purchase.

Algarve-Gold Imobiliaria & Turismo Lda. cannot be held responsible for the veracity of the foregoing information or any changes to Portuguese Law and Regulations.