Buying Property in Portugal The advice given below is general and to the best of my knowledge is correct and true at the time of writing. My first advice before parting with any money to anyone is to gain professional advice from a Portuguese lawyer. In Portugal they are affordable and available and are a small investment that could potentially save you loads in the long run.
As in the UK and I believe most EU countries you have to have planning permission. To build a house in Portugal this written consent from (licence) is also needed. Although relatively easy to obtain it can take some time. The following documents you do not need a lawyer to get, but again if you don't speak the language and know where the relevant offices are it can be difficult and time consuming. First and for most is a fiscal number (number de contribute or numero de fiscal). This is your tax number or known as national insurance number in the UK and can be obtained from any town hall. It is needed to do any transactions to do with your property in Portugal such as telephone, water, electricity etc. also you need one to open a bank account. A caderneta urbana, or caderneta rustica if it is a rural property you are buying. This is obtained from the local tax office (finacias) A habitation licence for any property that has been built after 1951 An insertion in the records of the local Consevatorio or land registry
When buying property in Portugal (or anywhere I guess) is to make sure the person selling it has the right to sell, if for instance as in inherited property the change of ownership might not have been registered at the local Conservatorio. The owner or owners if the property has been split to a family will all have to sign documents and then register them at the Conservatorio. This process can also take time, especially if the owners live abroad which can often be the case. Any debts that are owed by the property owner are immediately transferred to the new owner so it is important to check that taxes, loans or bills etc. are not outstanding. (This is what a solicitor in the UK would call a "local search"). Once you have agreed to buy it can be difficult to get out of these encumbrances.
Once all this process has been gone through you can put a deposit on the property. This can be anything between 5-50 % but is usually 10%. This is done in a form or promise to pay contract and has time limits put on it. If the seller withdraws then he then has to usually pay the buyer double the deposit. If the buyer withdraws then he has to pay in compensation all the expenses incurred by the seller. This helps to stop gurzumping.
Before completion of the purchase IMT tax has to be paid this is a sliding scale on the price of the property 0% on property up to €80,000, 2% on property between €80,000 and €115,000 less €1,600, 5% on property between €115,000 and €150,000 less €4,900, 7% on property between €150,000 and €250,000 less €7,900, 8% on property between €250,000 less €10,400 and 6% on all property above €500,000 Some time people are persuaded to register the price of the property lower than it really is to avoid paying a higher IMT tax, this can be dodgy (for the seller) as this gives the local council the right o buy at the stated price and not the market price, and also when the seller goes to sell on again he will have a bigger capital gains rise.
The completion or the purchase ends with payment of the remainder of the purchase price in the presence of an official in the state notary. This Escritura (deed of sale) can be carried out buy you or someone you have given power of attorney to. This also requires witnesses but they can be people present in the building. As I said at the beginning a Portuguese lawyer would be a good investment at the start of any purchase. This advice should be considered as a guide as interpretations and tax, legal and financial law changes.
