Along with Spain, Portugal share the top spot of being the go-to destination for a large portion of UK expats. With most retiring and enjoying the sun, sea and the wine, not forgetting a quality of life that is difficult to match here in the UK. It's easy to see why it's a large holiday destination also.
The top spots for buying property is Portugal is no doubt split between the Algarve, Madeira and Faro. Including, other spots such as Lisbon and Albufeira which are also popular locations that people from the UK chose to reside.
But if you are thinking of buying property in Portugal there is a lot of precautions and areas that must be understood, especially since it is a different country that has different laws and regulations. Before taking the leap, let's take a short run through the buying process.
The Buying Process and Costs Involved
In order to be able to purchase a property anywhere in Portugal non-residents are required to have a Fiscal Representative, which can be a lawyer who is a resident in Portugal, and obtain a Fiscal Number from a local tax office. This will enable the Fiscal Number to be recorded along with every document used throughout the buying process. And will used in the process of opening a bank account in Portugal.
The start of the process involves giving a deposit to the vendor or real estate agent. When buying property in the Algarve it's worth noting that all deposits are non-refundable.
There two main stages involved when buying a property are known as the promissory contract and the final deed. The promissory contract is a document that both the buyer and vendor or estate agent write down the conditions. This will include such things as price and payment conditions.
It is recommended to seek legal advice at this point, to ensure everything is legit, and that there is no outstanding mortgage or requirements that may have been missed by the buyers, which they did not agree to.
Before the second stage, and straight after the promissory contract has been created you will be asked to pay Imposto Municipal sobre Transmissoes de imoveis (IMT), which is simply known as property transfer tax. It is on the basis of this payment that the second stage can take place.
The second stage, known as the final deed and known as Escritura in Portugal. This occurs when the ownership of the property changes hands. This requires that all parties attend the Notary office and provide proof of payment before the presence of the Notary.
It is worth noting the costs are not limited to just the IMT and price of the property. In fact there are many other considerations and costs that will be required, here is a short list of some of the additional costs when buying a property in Portugal:
- Legal fees
- Land registry fees
- Stamp duty
- Property registration fees
- Legal fees
- Estate agent fees
All of this can make it appear very daunting, when thinking about purchasing a property in the Algarve or any other location in Portugal. But with professional legal advice, the process can become much simpler and less problematic.