Some clarification regarding purchasing a property in Portugal

First of all be assured that, as a fully registered and licensed real estate company, Esfera Real Ltd. will help you during the diferent stages of purchasing a property. We understand how complex the process can appear to those unfamiliar with Portuguese law and language.

We will seek to fully understand exactly what type of property you are looking for and how much you wish to spend. We will discuss with you the type of location, facilities and ensure that you have the benefit of all our local knowledge and experience. For clients that require a mortgage we would advise you to fully discuss this affair with your bank.

You will be helped to choose the properties that meet your criteria, after which we will arrange viewing visits to the locations that interested  you the most. We understand that our clients do not wish to waste precious time viewing properties which are not suitable.

When you have found the right property and agreed on the price and terms of the purchase, an agreement is drawn up between the parties, seller and buyer, by means of a promissory contract of sale, in which the details, conditions and obligations of the parties are written down. The buyer pays a 10% deposit to the seller which ensures the sale will proceed once all the conditions have been met. This gives protection to the seller, if the buyer doesn’t comply with the contract, the deposit shall be retained by the seller. Importantly, the buyer also has the protection of knowing that if the seller fails to fulfill the contract, the seller not only pays back the deposit but an additional sum equal to the deposit.

For non Portuguese clients it is important to know that you must obtain a fiscal number and open a Portuguese bank account. Esfera Real Ltd. will give you every assistance in obtaining those documents as well as offering you a choice of independent local lawyers to provide you with objective and legal advice on the purchase to ensure peace of mind in this important decision.

After the promissory contract has been signed, we proceed to obtain all the necessary documentation to accomplish the sale. The buyer must pay taxes at the local council offices in relation to Purchase Tax (IMT) and Stamp Duty (IS). The IS amount is 0.8% of the purchase price, and the IMT is on a sliding scale based on the value of the property, as below:

For example, to purchase a property for permanent residence with a price of € 125,000, comprising of a house and plot, with € 100,000 for the house and € 25,000 for the plot, the total cost of I.S. will be 1000 euros (125,000 x 0.08%), and I.M.T. will be € 1,401.86 (House: € 100,000 x 2% – € 1,848.14 = € 151.86, and Plot: € 25,000 x 5% = 1250 €).

The title deed will be completed by the notary then the buyer pays the balance of the purchase price, (unless the deposit has already been paid), and both parties will sign the title deed. Once this is completed the purchaser becomes the owner of the property! Once the sale has been accomplish, it will be necessary to arrange services such as water, electricity, gas, telephone, home insurance, T.V and Internet etc. Of course, we will be only too happy to assist you in arranging these services!

The annual Real estate-tax IMI (Imposto Municipal Imobiliário) is set differently from municipality to municipality and ranges between 0.4 and 0.8% of the purchase-value of the house.