Acquisition Process


Buying a property is one of the biggest and most important investments that you will ever make. Before going through the process, please ensure that you have done all the research that you require.

Make sure you use the services of a qualified Real Estate Agent (Make sure they are licensed and have the Real Estate License number (Known as AMI).

The Pink Real Estate Lda, License # 7285 team have been in the Real Estate business for 15 years and will keep you informed of all matters related to the purchase process, including all the fees, taxes, bank mortgages and legal issues that are required.Once you have chosen the property you wish to purchase, comparing prices and your proposal has been verbally accepted, insist on having the documents updated to ensure that the Seller is the registered and rightful owner and review them with your lawyer. A preliminary agreement, Promise Purchase Agreement (Known as Contrato Promessa Compra e Venda) sets out the terms of the sale, including the completion date. At this time, a 10% deposit is usually paid. If you give up the purchase, you will lose the 10% deposit. If the owner gives up, the owner must pay him twice the amount of the deposit. Make sure that anything you have verbally agreed with the seller during your negotiations is in writing when you sign the promissory contract of purchase and sale. In Portugal, Real Estate is usually sold with a property title. In an apartment or development, there are two other things to mention, namely Horizontal Property and the condominium system. The Portuguese law applicable in these areas are quite complete. It is a means of creating a freehold identity for a property that is part of a larger building, with common ownership of land, stairs, gardens, etc.

Documents of the property

Land registration

This certificate has a complete description of the registered legal history of the property and will reflect any mortgage. The certificate is obtained from the Land Registry Office and is usually issued with an expiration date.

Legal Description

This document identifies the property, not only by its unique tax number, but also by its property description (size, areas, number of bedrooms, floors and history). In addition, it also identifies the owner and their tax number.  

Property Documents

Land Registration Certificate (Known as the Certidão de Teor)
This certificate has a complete description of the registered legal history of the property and will reflect any mortgage. The certificate is obtained from the Land Registry Office (Conservatorio do Registo Predial) and is usually issued with an expiration date. 
Fiscal Certificate (Known as the Caderneta Predial)
This document identifies the property, not only by its unique tax number, but also by its property description (size, areas, number of bedrooms, floors and history). In addition, it also identifies the owner and their tax number.  
Utility Licence (Known as the Licença de Utilização)
This Licence is proof that the property has been approved for the purposes of which it is being used for. For example, as residential use or commercial use.

Title Deed (Known as the Escritura)

When all conditions set out in the original Promissory Contract have been met with, the Final Deed is drawn up and signed by both parties at a Public Notary Office.  This is effectively the final contract.  It is also at this time that the final payment is usually paid.  This is after the Notary Public Officer has witnessed the act and has ascertained and verified all the legal aspects of the entire transaction, including establishing the payment of the applicable purchase tax (IMT) and that all parties are in agreement with all the terms and conditions of the transaction.  The Original Escritura is then held by the Public Notary Office and a copy registered at the Public Records Office.  The purchaser obtains a certified copy of the Escritura when applying for the connection of all respective service facilities at the local Municipal Offices. 

Make sure you obtain an estimate in advance of all the fees and costs involved in the property purchase, including the Lawyers’ Fees, Notary Fees, Property Transfer Taxes, etc.

Property Registration (Registo)

Registration is done with the Land Registry Offices (Conservatório do Registo Predial) in the area in which the property in question is located as well as at the local Tax Revenue Offices (Repartição de Finanças). There will be purchase costs payable upon registration which will include registration costs, stamp duty, notary fees and other costs.

Purchase Costs, Transfer Tax (Known as IMT)

Since January 2004, transfer tax is now known as IMT ("Imposto Municipal sobre transmissões onerosas") and is calculated on the highest of the two taxable values (either on the newly predetermined taxable value or on the purchase price value.):
-Residential (Villas and apartments)   0-6%
-Agricultural land - Rustic property 5%
-Urban, construction land or commercial 6,5%
-Only when purchaser is domiciled in a tax haven territory which is known as off-shore - 15% 

It is advisable to have a lawyer check the property documentation. Most lawyers speak English.In Portugal, lawyers must be registered with the Portuguese Law Society. You can check their registration number on-line: www.oa.pt.

Stamp Duty (Imposto de Selo): This is 0.8% of the purchase price.

Opening a bank account
All Portuguese banks are part of a national grouping of banks called Multibanco. This makes accounts easily accessible and account holders may use a Multibanco debit card in ATMs across the country, and for buying most goods.
Non-EU citizens will need the following to open a bank account in Portugal;

-A passport
-Proof of address in country of origin
-Tax card and proof of employment

Expenses
Fiscal representation: Companies usually charge an initial fee of approximately €250, and an annual fee of approximately €250 for services as outlined above.(Find out FIRST if you need a fiscal representative)


Legal Fees: Solicitors typically charge between 1-2% of the purchase price plus VAT.


Property Registration Fee: You will have to register the purchase with the Property Registry Office (Conservatória do Registo Predial) of the area in which the property is located and at the Tax Office (Repartição de Finanças). The costs are as follows:


- Registration of purchase 250€.
- Registration of mortgage, 250€
- Extras 100€

Notary fees: When the Notarial profession was privatised, Notary fees changed substantially and now depend on the office where the Escritura is signed. The Title of Deed (Escritura Pública de Compra e Venda) has to be drawn up, signed by both parties in front of a public notary and lodged at the local Land Registry (Conservatoria do Registo Predial), with copies issued to the involved parties.

IMI - Annual Rates on the property

The IMI is an annual tax on a property. 

0.8% for rural properties;

0.2 to 0.5% for urban properties (Villas, apartments, offices and commercial spaces) when the Taxable Asset Value has been updated according to the new rules;

0.4 to 0.8% for urban properties which have not yet been re-evaluated in accordance with the new rules;

1% for any property owned by residents of the territories listed as 'Tax Havens' or Reduced Tax Domiciles by the Ministry of Finance. 

This rate increases to 2% if the property is left empty for periods longer than a year.

Where a spread exists, the actual rate is determined annually by the Municipality of the area in which the property is situated and may exceed the limits under special circumstances.

The IMI calculation is based on the values recorded in the Property Matrix on 31 December of each year and is due at the end of April of the following year. Should the amount exceed €250, it can be paid in two installments, the first at the end of April, and the second at the end of September, of the year following that for which the tax applies.

When an urban property is used as a permanent and personal residence, some exemptions apply. The number of years’ exemption depends on the Taxable Asset Value (TAV) as follows:

Taxable Asset Value Years of Exemption

  • Up to €150,000- 6 years
  • €150,000 to €225,000- 3 years
  • Greater than €225,000- No exemption

Expenses

Fiscal representation: Companies usually charge an initial fee of approximately €250, and an annual fee of approximately €250 for services as outlined above.(Find out FIRST if you need fiscal representative)

Legal Fees: Solicitors typically charge between 1-2% of the purchase price plus VAT.

Property Registration Fee: You will have to register the purchase with the Property Registry Office (Conservatória do Registo Predial) of the area in which the property is located, and at the Tax Office (Repartição de Finanças). The costs are as follows:
- Registration of purchase 250€.
- Registration of mortgage, 250€
- Extras 100€

Where are we

  • Rua João Tavira, 55
    9000-075 Funchal
  • (+351) 291 759 177
  • (+351) 912 349 650
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