Buying Property in Portugal

Summary: A little about the property market in Portugal and the practical and legal steps to purchasing real estate

A little about the property market in Portugal and the practical and legal steps to purchasing real estate

Find out about the buying process when purchasing in Portugal.

Property in Portugal is big business!

The world wide property boom reached Portugal a number of years ago with vast areas of coastal land in the Algarve being developed for prime real estate, golf courses and luxury housing complexes.  With tennis courts, swimming pools and golfing complexes abounding the area quickly earned the name “Sportugal”! 

A lot of the development has been tastefully done with developments of being well built on the whole, and if you are looking for that ultimate holiday villa set in a secluded garden with bougainvillea and hibiscus growing around your own private swimming pool you will no doubt find exactly what you are looking for in the Algarve. 

Lagos is one of the Algarve’s most attractive towns and offers some of the province’s best beaches - as a result it is a highly desirable place to live and where you will find stunning property - but at the scarier end of the price scale!

If instead you are looking for an idyllic rural hideaway beyond the tennis courts and golf developments, you won’t be disappointed either.  Portugal still has a lot to offer both the house hunter and the property investor.  It is possible to find a rural farm house ripe for renovation, a traditional townhouse to develop or a perfectly restored fisherman’s cottage.

Portugal has property to suit every lifestyle requirement and every budget.

Before you start hunting for your perfect home, make sure any estate agent or realtor who assists you is licensed by the government.  In Portugal a license is granted by the State to an estate agent if he has all of the required qualifications to operate.  The license is a guarantee that the realtor is qualified in his profession and is also a sort of insurance cover that can be claimed against in the case of proven dispute.

Guide to Purchasing Real Estate: -

- Once you’ve found an agent and they have helped you find your dream home and you wish to go ahead and buy it, you will have to sign a Contrato de Promessa de Compra e Venda which is a contract of sale.

- This is a legally binding document stating the conditions of sale.  It should be drawn up by a notary.

- At this stage it is normal for a deposit of between 10 and 12% to be paid.  If you drop out of the sale for some reason you will forfeit this money.

- The good news though is that if the vendor decides to withdraw from the sale they are legally obliged to repay you twice your deposit!

- Every purchaser is required to obtain a Fiscal Number from the local Tax Office.

- A date will be set for the signing of the final deed, called the Escritura de Compra e Venda.  This is usually three or four weeks after the signing of the contract of sale and gives your lawyer time to run checks on the property to make sure there are no outstanding mortgages or unpaid taxes against the property for example, and that all is legally in order.

- Prior to the final act of purchase, the purchase will be subject to a Municipal payment named called IMT or Imposto Municipal sobre Transamissoes which as of the 1st of January 2003 replaces the previous tax payment named “SISA”.

- This payment is paid in the tax office nearest to the property.  The amount to be paid is related in terms of percentage by “platforms” to the cost of the property being purchased.

- In limited cases the buyer will be exempt from paying this tax.

- As soon as you sign the final contract your lawyer will register the property with the Land Registry in your name.

- The vendor of a property usually pays any commission to the estate agent, this is not a controlled percentage and it can vary from area to area.

- If you purchase a property in Portugal with the intention of renting it out for parts or all of the year you may be liable to taxation on income and gains in Portugal.

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