Only use a Government Licensed Estate Agent.
It is quite normal for both Parties to initially enter into a Promissory
Contract detailing the conditions of Sale - "Contrato de Promessa
de Compra e Venda". This Contract is then legalised by registering
it in the Notary Office. This Contract is legally binding on both sides
and the law requires the seller to repay twice the deposit should they
withdraw from the sale. Likewise, it the buyer fails to complete they
forfeit the total of the deposit. There are specific laws relating to
this act that a Lawyer will define.
It is often convenient for the buyer to ask a third party such as their
Lawyer to act for them in the matter. A document called "Procuração
Publica" is prepared with the necessary details and registered in
the Notary. This can also be implemented in a Portuguese Consul in a
foreign country.
Every buyer is required to obtain from the Tax Office (Finanças), a
fiscal number.
Prior to act of purchase, the purchase will be subject to a Municipal
payment named "IMT - Imposto Municipal sobre Transamissões"
which as from the 1st of January 2003 replaced the previous tax payment
named "SISA". This payment is paid in the local 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.
|
Value of Property |
Percentage Applied |
Deducted Value |
| Up to € 85.500,00 |
1% |
€ 0,00 |
| € 85.500,00 until € 117.200,00 |
2% |
€ 855,00 |
| € 117.200,00 until € 266.400,00 |
5% |
€ 4.370,00 |
| € 159.800,00 until € 266.400,00 |
7% |
€ 7.567,01 |
| € 266.400,00 until € 511.000,00 |
8% |
€ 10.231,09 |
| Superior to€ 511.000,00 |
6% |
€ 0,00
|
Example:
Price of property = € 100.000,00 x 2 % (% tax to apply) = € 2.000,00
Deducted Value (difference) € 855,00
Total to be Paid = € 2.000,00 - € 855,00 = € 1.145,00 IMT Tax
Commercial and building plots: pay flat rate of 6,5% of IMT Tax
Rustic and Agricultural lands: pay flat rate of 5% IMT Tax
When buyer is an Offshore company, Tax to be paid is flat rate of 15%
When all the above requirements have been completed the act of sale
can proceed in any Notary Office. This act is known as the
"Escritura de Compra e Venda" which takes place in
front of the selected Notary and is recorded in his official books.
The Notary will check prior to the act of sale that all the necessary
documents are correct to ensure that the sale can proceed according
to the facts provided. It is at this moment that payment is normally
completed to the seller, and when applicable, the balance of purchase
has to be made according to the signed Contract in Point 2 above.
After the act is recorded the Notary Office will issue an official
photocopy of the entry which is the proof to the buyer that the act
has officially taken place. The photocopy will carry the seal of the
Notary but as further official copies can be requested at any time
this document should not be mistaken for a "Title Deed" -
as known in the UK.
Stamp Duty
A Tax is levied on all documents, books, papers, acts and products
listed in the General Schedule Stamp Duty Schedule and is determined
by the value of the act, or, contract. A property purchase is
subjected to a Stamp Duty of 0,8% of the declared value.
On completion of the above Notarial act the property in question has
then to be registered in the new owners name in the Land Registry
(Conservatoria do Registo Predial). This registration is not
obligatory until the owner wishes to sell the property However, it is
strongly recommend that this registration is made immediately after
the Notary act as a preventative measure against a possible financial
abuse by the previous owner.
Every year the owner of any property is subject to pay an annual Tax
named "IMI" (formerly know as "Contribução
Autarquica"), which can be related to the UK word
"Rates". This charge is levied each April relating to the
previous year and if the amount exceeds €250.00 then it will be
divided into two equal bills, the first for payment in April, and the
second, for payment in September. It is most important to pay this
charge as the failure for doing so eventually results in the property
being placed for sale on the market by the State and goes to the
highest bidder.
IMI - (Imposta Municipal de Imóveis)
This is a municipal tax is levied on the taxable estate value on all
properties located in Portuguese territory. The taxable person is the
named owner of the property, usufructuary and surface rights holder,
as on the 31st of December of the year in which the tax is related.
The IMI Rates are calculated on the following basis: for Rural
properties 0,8%; for Urban properties-between 0,2% to 0,5% (variable
from council to council and reviewed annually)
