Saturday, June 03, 2006
Real Estate Guide: Buying a Property in Portugal
Q. Who sets the price of the property in the Algarve?
Q. Do I need a fiscal number?
Q. Is there any condominium costs for the property?
Q. What additional costs are there to living in the Algarve?
Q. Do I need permission to purchase a holiday property in the Algarve?
Q. Do I have to be in the Algarve to complete the transaction?
Q. Can I take money in and out of the Algarve freely?
Q. In whose name should I purchase the holiday property in Algarve?
Q. Should I make a Will for my holiday property in the Algarve?
Q. What are the legal steps required to purchase a holiday property in the Algarve Portugal?
Q. Is there Inheritance Tax in Portugal?
Q. Who sets the price of the property?
A. If you are purchasing a holiday property on a new development in the Algarve, it will have been set by the developers/management company. Regardless of agent's commissions, you should still pay the same price whoever you purchase through ... whether you go direct or through a third party. Resale properties in the Algarve are usually handled by Government licensed Real Estate agents.
A. Going through a licensed company has several advantages: You will get to see a wide range of properties that suit your requirements; you will have the benefit of our many years experience, as well as fully staffed offices to support you in the all of the bureaucracy of the paper work. It will eliminate any possible language problems and it helps take away the stress and strain associated with purchasing a holiday home in the Algarve.
Q. Do I need a fiscal number?
A. Yes you need a fiscal number: an application has to be made to obtain a fiscal number. Without this fiscal number document, a buyer will not be able to complete the deed of purchase.
Q. is there any condominium costs for the property?
A. When buying a property in a condominium there are condominium costs. This condominium costs cover the maintenance of the condominium, example: garden, pool…. communal areas. Average charged prices per year: one bedroom apartment € 500, two bedroom apartment € 700.Independent villas don’t pay condominium.
Q. What additional costs are there?
A. You may be looking into your budget to purchase a property in the Algarve. You should be aware of the following costs (estimated)Notaries and registration fees - 1.5% of the purchase priceIMT transfer tax, as similar to UK stamp duty - up to 8% (depending on the type of property and price).
Real Estate Agent's fees (PAID BY THE SELLER ONLY, NOT BY THE BUYER) are usually subject to agreement.
We can recommend you a lawyer or solicitor (normal charge, 1% of the price of the property).
Q. Do I need permission to purchase a property in the Algarve?
A. Generally, no. Where necessary, a lawyer can apply for the permission for you.
Q. Do I have to be in the Algarve to complete the transaction?
A. In the event that you will not be able to attend the signature of the promissory contract and the "escritura", your lawyer will provide you with a power of attorney and advise you of the necessary formalities for this document to be prepared abroad and accepted in Portugal.
Q. Can I take money in and out of the Algarve freely?
A. Yes.
Q. In whose name should I purchase the holiday property?
A.There are a number of ways to purchase the property in the Algarve: In your own name, in the joint names of you and your partner, or co-purchaser(s), in the names of your adult children, or in the name of somebody who will eventually inherit the property from you, or In the name of your Company.
Q. Should I make a Will for my property in Portugal?
A. It is strongly recommended that once you have purchased a property in the Algarve Portugal in your own name, you instruct your lawyer to prepare a Will. You are allowed to have a Will for your Portuguese assets only, without replacing the main Will you may have in your own country. The most common type of Wills is also signed at the Portuguese Notary's books and is strictly private and confidential. With the right people assisting you, purchasing an overseas property can be an enjoyable and rewarding experience ... If you still have questions having read this section, please don't hesitate to contact me!
Q. What are the legal steps required to purchase a holiday property in the Algarve?
Step 1 - Property searches: we would call this phase the essence of buying a property in the Algarve. In order to make sure that the property you are willing to buy has a good clean title searches must be carried out, at least, in the following public departments: (Conservatória do Registo Predial) - Land Registry Department. This is a department where you will find information about property, i.e. ownership, description, mortgages, encumbrances and charges.( Repartição de Finanças) - Finance Department. You will also find in this department information about properties - their description and taxes, namely predial tax "IMI". Câmara Municipal - City Council. In this department you will find information about planning permission, possibility of construction in country areas, rules applicable to certain developments, approval of projects, building licences and habitation licences.
Step 2 - Promissory contract In order to secure the deal, it is advisable and usual in Portugal to sign a promissory contract "contrato promessa de compra e venda", whereby all conditions for the sale agreed with the vendor will be stated including completion date. A deposit is payable at the signature of the said contract and its amount subject to agreement between the parties. This promissory contract is also signed by both the vendor and the buyer and an agreed deposit is paid by the buyer to the vendor (normally 10% of the value of the property). This contract safeguards both parties; should the vendor not complete the sale, he is required by law to repay twice the amount of the deposit to the buyer. Should the buyer not complete the purchase, the vendor is entitled to retain the deposit paid.
At this stage you will need to decide whether you purchase the property in your name or you follow a different route. Nowadays with the changes in the law affecting offshore ownership companies this is no longer a route often chosen. A tax efficient way to purchase properties must be looked into case by case.
Step 3 - Notarial deed of purchase and sale completion is known in Portugal as "Escritura Pública de Compra e Venda" whereby the ownership of the property is transferred to you. All the property documents must be submitted to the notary, together with the proof of payment of tax on the transfer of the property known as Municipal Transfer Tax (MTT) whenever applicable. This "escritura" is signed at a Notary's book on the date you have agreed to close the deal. At this same time the balance of the purchase price is paid to the vendor.
Step 4 – Registration: Even though you have become the owner of the property, when you signed the "escritura", it is the registration of the property in your name, at the Land Registry Department, which grants you full security of ownership, as it will protect against claims by third parties.
Step 5 – Installation of water, gas and electricity—Applications for installation of water, gas and electricity where appropriate, are made to the authorities concerned, after the deeds have been affected.
Q. Is there Inheritance Tax in Portugal?
A. Inheritance Tax in respect of property has been abolished for persons with Portuguese residency - those with tax residency elsewhere will be liable (or not) under that jurisdiction.
A Will, It is highly recommended that once you have purchased a property in Portugal, in your own name, you have a Will for your Portuguese assets only.
We hope that the above summary will help you through the procedures of buying your home in the Algarve Portugal. ¶ 11:50 AM
Q. Do I need a fiscal number?
Q. Is there any condominium costs for the property?
Q. What additional costs are there to living in the Algarve?
Q. Do I need permission to purchase a holiday property in the Algarve?
Q. Do I have to be in the Algarve to complete the transaction?
Q. Can I take money in and out of the Algarve freely?
Q. In whose name should I purchase the holiday property in Algarve?
Q. Should I make a Will for my holiday property in the Algarve?
Q. What are the legal steps required to purchase a holiday property in the Algarve Portugal?
Q. Is there Inheritance Tax in Portugal?
Q. Who sets the price of the property?
A. If you are purchasing a holiday property on a new development in the Algarve, it will have been set by the developers/management company. Regardless of agent's commissions, you should still pay the same price whoever you purchase through ... whether you go direct or through a third party. Resale properties in the Algarve are usually handled by Government licensed Real Estate agents.
A. Going through a licensed company has several advantages: You will get to see a wide range of properties that suit your requirements; you will have the benefit of our many years experience, as well as fully staffed offices to support you in the all of the bureaucracy of the paper work. It will eliminate any possible language problems and it helps take away the stress and strain associated with purchasing a holiday home in the Algarve.
Q. Do I need a fiscal number?
A. Yes you need a fiscal number: an application has to be made to obtain a fiscal number. Without this fiscal number document, a buyer will not be able to complete the deed of purchase.
Q. is there any condominium costs for the property?
A. When buying a property in a condominium there are condominium costs. This condominium costs cover the maintenance of the condominium, example: garden, pool…. communal areas. Average charged prices per year: one bedroom apartment € 500, two bedroom apartment € 700.Independent villas don’t pay condominium.
Q. What additional costs are there?
A. You may be looking into your budget to purchase a property in the Algarve. You should be aware of the following costs (estimated)Notaries and registration fees - 1.5% of the purchase priceIMT transfer tax, as similar to UK stamp duty - up to 8% (depending on the type of property and price).
Real Estate Agent's fees (PAID BY THE SELLER ONLY, NOT BY THE BUYER) are usually subject to agreement.
We can recommend you a lawyer or solicitor (normal charge, 1% of the price of the property).
Q. Do I need permission to purchase a property in the Algarve?
A. Generally, no. Where necessary, a lawyer can apply for the permission for you.
Q. Do I have to be in the Algarve to complete the transaction?
A. In the event that you will not be able to attend the signature of the promissory contract and the "escritura", your lawyer will provide you with a power of attorney and advise you of the necessary formalities for this document to be prepared abroad and accepted in Portugal.
Q. Can I take money in and out of the Algarve freely?
A. Yes.
Q. In whose name should I purchase the holiday property?
A.There are a number of ways to purchase the property in the Algarve: In your own name, in the joint names of you and your partner, or co-purchaser(s), in the names of your adult children, or in the name of somebody who will eventually inherit the property from you, or In the name of your Company.
Q. Should I make a Will for my property in Portugal?
A. It is strongly recommended that once you have purchased a property in the Algarve Portugal in your own name, you instruct your lawyer to prepare a Will. You are allowed to have a Will for your Portuguese assets only, without replacing the main Will you may have in your own country. The most common type of Wills is also signed at the Portuguese Notary's books and is strictly private and confidential. With the right people assisting you, purchasing an overseas property can be an enjoyable and rewarding experience ... If you still have questions having read this section, please don't hesitate to contact me!
Q. What are the legal steps required to purchase a holiday property in the Algarve?
Step 1 - Property searches: we would call this phase the essence of buying a property in the Algarve. In order to make sure that the property you are willing to buy has a good clean title searches must be carried out, at least, in the following public departments: (Conservatória do Registo Predial) - Land Registry Department. This is a department where you will find information about property, i.e. ownership, description, mortgages, encumbrances and charges.( Repartição de Finanças) - Finance Department. You will also find in this department information about properties - their description and taxes, namely predial tax "IMI". Câmara Municipal - City Council. In this department you will find information about planning permission, possibility of construction in country areas, rules applicable to certain developments, approval of projects, building licences and habitation licences.
Step 2 - Promissory contract In order to secure the deal, it is advisable and usual in Portugal to sign a promissory contract "contrato promessa de compra e venda", whereby all conditions for the sale agreed with the vendor will be stated including completion date. A deposit is payable at the signature of the said contract and its amount subject to agreement between the parties. This promissory contract is also signed by both the vendor and the buyer and an agreed deposit is paid by the buyer to the vendor (normally 10% of the value of the property). This contract safeguards both parties; should the vendor not complete the sale, he is required by law to repay twice the amount of the deposit to the buyer. Should the buyer not complete the purchase, the vendor is entitled to retain the deposit paid.
At this stage you will need to decide whether you purchase the property in your name or you follow a different route. Nowadays with the changes in the law affecting offshore ownership companies this is no longer a route often chosen. A tax efficient way to purchase properties must be looked into case by case.
Step 3 - Notarial deed of purchase and sale completion is known in Portugal as "Escritura Pública de Compra e Venda" whereby the ownership of the property is transferred to you. All the property documents must be submitted to the notary, together with the proof of payment of tax on the transfer of the property known as Municipal Transfer Tax (MTT) whenever applicable. This "escritura" is signed at a Notary's book on the date you have agreed to close the deal. At this same time the balance of the purchase price is paid to the vendor.
Step 4 – Registration: Even though you have become the owner of the property, when you signed the "escritura", it is the registration of the property in your name, at the Land Registry Department, which grants you full security of ownership, as it will protect against claims by third parties.
Step 5 – Installation of water, gas and electricity—Applications for installation of water, gas and electricity where appropriate, are made to the authorities concerned, after the deeds have been affected.
Q. Is there Inheritance Tax in Portugal?
A. Inheritance Tax in respect of property has been abolished for persons with Portuguese residency - those with tax residency elsewhere will be liable (or not) under that jurisdiction.
A Will, It is highly recommended that once you have purchased a property in Portugal, in your own name, you have a Will for your Portuguese assets only.
We hope that the above summary will help you through the procedures of buying your home in the Algarve Portugal. ¶ 11:50 AM
