- Real Estate in Portugal
There are no restrictions on foreign property buyers in Portugal. The country is highly sought after by foreign citizens, who look for properties either as vacation homes or retirement investments.
Our expert lawyers will guide you through the entire process, ensuring your investment is protected. PMCG team has extensive experience dealing with a wide range of real estate transactions, providing advice on both commercial and residential investments.
If you are planning to buy property in Portugal, you must obtain a Portuguese taxpayer number, which requires you to be a taxpayer in the country. This number can be acquired from a local tax office. If you are a non-EU citizen, you are required to appoint a professional as a tax representative in Portugal.
There are various property rights available, covering different methods of acquiring an interest in a property:
- Surface right: allows for the construction of a building on land owned by a third party, with such rights being either permanent or temporary.
- Usufruct: grants the right to use and reside in a third party’s property for a specified period, allowing the beneficiary to enjoy the property as if they were the owner.
- Full ownership: provides the exclusive right of full possession of the property.
- Right of use: permits an individual to use a third party’s property for personal or familial needs.
Costs Associated with the Purchase
In addition to the property’s purchase price, other costs include:
- Imposto Municipal sobre Transmissões Onerosas de Imóveis (IMT): also known as the property transfer tax, which is paid by the buyer upon the transfer of ownership in Portugal. The tax rate varies from 1% to 8%, depending on the purchase price, the property’s location, and whether it will be the buyer’s first or second home in Portugal.
- Imposto de Selo (Stamp Duty): levied at a rate of 8% of the purchase price.
- Notary and Land Registry Fees: typically ranging from 1% to 2% of the purchase price.
The Transaction
The property purchase process in Portugal is similar to that in the UK. Before completing the transaction, it is crucial for the buyer to conduct thorough due diligence to verify the property’s origin and the seller’s right to sell. This includes ensuring there are no charges, tax debts, licenses, encumbrances, or other liabilities against the property. The necessary information for this due diligence can be obtained from authorities such as the Land Registry, although sellers often provide the relevant documentation.
The transfer of ownership is typically carried out via a public deed by a public or private notary, or an authenticated private document, which is then registered with the Land Registry. Special situations may require additional consent, such as when the property is part of a marital agreement.
Vendor warranties, governed by statute, relate to the property’s condition and risks like asbestos. The seller is prohibited from selling a property with defects that would hinder its normal use and must disclose any encumbrances if they claim none exist. If discrepancies are discovered, the buyer may seek a refund and take legal action to annul the sales and purchase agreement.
In Portugal, there is no mandatory format for a sales and purchase agreement (SPA), providing flexibility for the parties in structuring the contract. However, the document must be executed as a public deed or authenticated private document and registered with the Land Registry. PMCG lawyers ensure the agreement includes the necessary provisions, such as a detailed property description, and oversee the required registrations.
We are at your disposal to clarify any information or questions you may have.
PMCG, aug 2024