Purchasing

 

 

The purchasing process in Portugal has its own set of rules. The Portuguese law defines the legal position of parties and with the deeds the purchaser  assumes full possession, also of any obligations and onuses that belong to the property.

When you have found your property you appoint a lawyer to investigate any possible onuses, liens or obligations  that may be there. It is important that the lawyer also investigates that all buildings, including the pool, are formally registered with all entities. The notary in Portugal only checks whether the contracts are conforming the legal obligations. The lawyer is your private counselor who will secure your best interest.

Usually the buyer´s lawyer prepares a promissory contract, in which you will find the purchase amount, delivery date and conditions. Only when this contract has been signed by both parties and your downpayment has been received, then there is a formal agreement and a legal position.

If after the promissory contract the vendor does not deliver , he generally is obliged to pay the downpayment in double to the promised buyer. If the promised buyer does not proceed with the deeds he looses his downpayment.

The buyer always pays the purchasing costs. Thye consist of: transfer tax (see the overview), stamp duty of 0,8% for the government, costs for notary and for the land registry. A lawyer will charge a fee of between 1 and 2,5% of the purchasing price. 

 

Amount on which IMT will be levied

Applicable rate

Amount to deduct on this

Till € 92.407

1%

€ 0,00

From € 92.407 to € 126.403

2%

€ 924,07

From € 126.403 to € 172.348

5%

€ 4.716,22

From € 172.348 to € 287.213

7%

€ 8.163,09

From € 287.213 to € 550.836

8%

€ 11.035,30

Above € 550.836

6%

€ 0,00

 

For rustic properties the transfer tax is 5%. Properties in blacklisted jurisdictions are charged at 10%.

 

Purchasing costs consist of transfer tax and the following:

  • 0,8% fee for the government
  • Notary fees
  • Inscription in the land registry

(Approx. 1,5% combined)

Lawyer 1%-2,5% on the purchasing price,  excl. VAT (23%)

 

Purchasing process:

  •  Verbal agreement (not formal yet)
  •  Promissory contract (usually downpayment of 10-30% of purchasing price) – if vendor does not deliver then he will have to  pay this amount back in double, if buyer does not complete then this amount is forfeit
  •  Formal deeds