Andreia Cordeiro

(+1) 914 316-9646

  • Início
  • Blog
    • Blog
  • Gallery
  • Listings
    • New York
    • Portugal
  • New York
    • Steps to sell a property
    • Steps to buy a property
    • Westchester County
  • Connecticut
    • Fairfield County
  • Portugal
    • Como vender o seu imóvel
    • Regions of Portugal
    • Invest in Portugal
  • More
    • Início
    • Blog
      • Blog
    • Gallery
    • Listings
      • New York
      • Portugal
    • New York
      • Steps to sell a property
      • Steps to buy a property
      • Westchester County
    • Connecticut
      • Fairfield County
    • Portugal
      • Como vender o seu imóvel
      • Regions of Portugal
      • Invest in Portugal
Andreia Cordeiro

(+1) 914 316-9646

  • Início
  • Blog
    • Blog
  • Gallery
  • Listings
    • New York
    • Portugal
  • New York
    • Steps to sell a property
    • Steps to buy a property
    • Westchester County
  • Connecticut
    • Fairfield County
  • Portugal
    • Como vender o seu imóvel
    • Regions of Portugal
    • Invest in Portugal

The steps of buying a Privately Owned Property


STEP 1

After finding a property and negotiating a deal, any good agent will prepare the proposal letter. The  proposal letter outline all of the terms and conditions agreed during the negotiations. Both parties should appoint a local lawyer and the proposal letter  are then sent to the lawyers representing both parties. The vendor's lawyer will then forward all of the property documentation to the buyer's lawyer, who will then perform his due diligence and prepare the contract.


STEP 2

Once due diligence on the property has been completed by the buyer's lawyer, the Promissory contract (Contrato de Promessa de Compra e Venda) will be prepared, which needs to be signed by both the vendor and the buyer.


STEP 3

Once the Promissory Contract has been signed, the buyer will normally pay between 10% or 20% deposit to the vendor, generally via the lawyer's client accounts.


STEP 4

The Final Deed (Escritura) is the transfer of ownership to the buyer, which is signed on an agreed date at the notary's office. If the buyer or seller cannot be present, then they can give power of attorney to their legal representative.


STEP 5

The purchase balance and associated taxes are paid and the notary records the transaction officially.


STEP 6

The buyer's lawyer will register  the new owner in the Land Registry (Registo Predial), and usually also changes all utility bills into the new owner's name.

Privately Owned - Buying Costs

  • Legal Expenses - 1-2% of purchase price
  • IMT (Property transmission tax) - Variable up to 6.5% for residential properties with a value of over 1 million is 7%
  • Stamp Duty - 0,8% of purchase price
  • Notary & Registration Fees - Usually between EUR 1.000 - 2.000



DUE DILIGENCE


Before any purchase, due diligence is performed by the buyer's lawyer and involves checking that all the paperwork of the property is in order and ensuring that there are not charges or encumbrances on the property. 

WHY INVEST IN PORTUGAL - Insurance in portugal

HEALTH INSURANCE

HEALTH INSURANCE

HEALTH INSURANCE

The healthcare system and health insurance in Portugal is one of the many benefits citizens and legal residents can enjoy. This section provides a complete overview of the healthcare system, whether that is public or private medical care.

You can take out private health insurance in Portugal if you wish to, especially when considering the long waiting times in the public healthcare system for elective procedures and appointments.

Health Insurance offers comprehensive coverage and healthcare for individuals and families living abroad for a year or longer. Coverage should include in-patient, out-patient, wellness, evacuation, dental, vision, and select other benefits. You get to choose the hospital or doctor of your choice. Additionally, with medical insurance, you can also choose a private hospital over a public facility to receive faster, and often higher quality, care.

The prices depends of the age but are around $100 and $221 per month maximum. Depend what are included in the health insurance package.

LIFE INSURANCE

HEALTH INSURANCE

HEALTH INSURANCE

Life insurance is protection against the risks of death or disability. It ensures that your dependents are catered for in the event that you are no longer able to provide for them. 

Although life insurance is not compulsory in Portugal, there are a number of providers in the country and many expats take out coverage. There are different policy types, including:

  • Annual renewable term – where you recalculate the premium every year upon renewal, based on your age and health;
  • Decreasing term – where the premium stays at a fixed amount for a set period of time.

Here are some other good reasons why people consider purchasing term life insurance:

  • If you pay a mortgage
  • If your spouse would not be able to replace your salary
  • If your children need college funding
  • If an aging parent or disabled family member relies on your finances or care
  • To pay off student loans or other large loans (cosigned loans still need to be repaid)
  • To cover funeral costs
  • To leave money behind to your loved ones in times of uncertainty and grief

HOME INSURANCE

HEALTH INSURANCE

HOME INSURANCE

Home insurance is mandatory in Portugal if you are taking out a mortgage. It is not obligatory for rented accommodation. However, landlords will be obliged to take out at least minimum level of insurance on the property and may well factor this into rental costs. 

There are two types of building insurance on homes in Portugal:

  • Fire insurance (seguro de incendio) – this is the minimum requirement for all home-owners and covers all parts of the property against damage caused by fire. Most fire insurance policies also include coverage against floods, storms, lightning damage and other natural disasters. 
  • Multi-risk insurance (seguro multirriscos) – this is an optional comprehensive coverage that includes things such as public liability. 

You can also include contents insurance with many home insurance policies to protect your possessions as well as the property. 

Costs for home insurance in Portugal will depend on factors such as property value, level of coverage and risks associated with the property.

WHY INVEST IN PORTUGAL - Taxes in Portugal


If you purchase property in Portugal and you are not a resident in Portugal, you are liable to pay some taxes. By definition you are considered to be not living in Portugal if you do not spend 183 days per year (Tax Calendar Year) or more living in Portugal or if your primary address is not there.

INDIVIDUAL TAXATION As a Non-Portuguese resident, you are liable to tax on your Portuguese sourced income and a married couple are taxed jointly. 


Rental Tax


If you decide after you have purchased your property that you wish to rent it out, then you will be taxed on that rental income. Net rental income is taxed at a flat rate of 15%, which is withheld at the source.

The Taxable income, can be calculated as the gross rent minus any maintenance costs, related expenses for example insurance premiums and the municipal tax, and also any repair costs that may have arisen. You cannot deduct your interest costs which may have incurred when you bought the property.


Property Tax (IMI)


As an owner of property in Portugal you will have to pay property tax (Immovable Property Tax, IMI).

Each individual municipal has its own rate, and is decided by the municipal assembly. The person/Corporation that owns the property on the last day of the respective tax year is liable to pay the IMI Tax.

  • The Tax rates range from 0.3% to 0.45%.
  • Property in rural areas are be taxed at 0.8%( Rustic Properties), whereas property in more urban areas will fall in the stated range.
  • Property that has been re-valued since 2004 will fall between 0.2 and 0.5%, and property valued before 2004 will be between 0.4 to 0.8%.
  • Property owned through a corporation domiciled in "Black" listed jurisdictions (Tax havens - E.G British Virgin Islands, Isle of Man, Gibraltar) will pay a straight 7.5% Tax of the rateable value.
  • Some property cases will be exempt from the property tax (IMI). Property which is to be used as a permanent home or to be rented out will be exempt from property tax (IMI) for a period of 3 years and will depend upon the patrimonial value of the property.
  • Exemption applies for a three-year period, in case of urban properties with a Tax Registration Value up to € 125,000, held by individuals which obtained a taxable income in the year prior to the acquisition, of up to € 153,300.


Property Purchase Tax - IMT (Imposto Municipal sobre Transamissões)


Is a property transaction tax paid by the buyer when there is a transfer of ownership of real estate in Portugal. The percentage of tax charged can range from 1% to 8%, depending on a few factors including the purchase price for the real estate, the location of the property and whether it is first or second home in Portugal.

It’s also worth noting that Portugal’s property transfer tax or IMT has to be paid before the completion of purchase but if the transfer takes place outside the territory of Portugal, the payment may be made the following month.


Exemptions:


Some facts are exempt from IMT, namely the ones mentioned below. Exemption may depend on certain requirements:

  • acquisition of properties for resale by Real Estate Trading companies;
  • acquisition of properties intended for urban rehabilitation;
  • acquisition of property or autonomous fraction of urban property intended to install tourism complex to which has been attributed tourism utility;
  • acquisition of real estate by Real Estate Investment Funds for Residential Letting;
  • restructuring operations or cooperation arrangements;
  • acquisition of buildings classified as of national/public/municipal interest;
  • exemption or reduction of the IMT rate, regarding the acquisition of property that constitute eligible investment under Investment Promotion Tax Regime (RFAI).


Additional IMT Rates:

  • Commercial & Building Plots: Pay flat rate of 6.5% IMT.
  • Agricultural & Rustic Lands: Pay flat rate of 5% IMT.
  • Property acquired by a Corporation domiciled in White listed jurisdictions: Pay the same rates of IMT as in the chart above.
  • Property acquired by a Corporation domiciled in Black listed jurisdictions: Pay 15% IMT.
  • The purchase of shares of a White listed Jurisdiction Corporation: Pay NO IMT.
  • The purchase of shares of a Black listed Jurisdiction Corporation: Pay 8% IMT.


You can calculate an estimated Portugal’s property transfer tax cost on your purchase in here:

FIND OUT MORE

Wealth Tax (AIMI)

First introduced back in 2017, the Adicional Imposto Municipal Sobre Imóveis (AIMI) is seen as Portugal's version of a wealth tax, which affects owners with a share in Portuguese property worth over €600,000. Regardless of residency status, rates applied are 0.4% on the total amount for properties held by companies, 0.7% for individuals and 1% for those owning property valued over €1 million.

There is some relief which comes via a €600,000 allowance per person, deducted from the value of all Portuguese properties.


The values below are based on the Patrimonial Values of the property:


  • Up to the value of €600,000 No AIMI is payable
  • Between €600,000 and €1Million 0.7% on the value between €600,000 and €1 Million
  • Valued above €1 Million 0.7% on €400,000 + 1 % on Value in excess of €1 Million

Those not eligible for the allowance pay AIMI on the full property value. However, for both IMI and AIMI, the tax authorities calculate property value using the Valor Patrimonial Tributário (VPT), bear in mind these values are usually lower than the actual market value.

Stamp Duty, Notary and Registration Fees


To be paid by the purchaser prior to signing the notarial deed and the registration of the property of the property into the buyer's name. Stamp duty is 0.8% of the sales price. Notary and registration fees vary between EUR 1.000 to 2.000. 


Capital Gains Tax


There is a Capital Gains tax in place in Portugal on the sale of a property at a rate of 28% for individuals and 25% for companies (non-residents).

If the money from a sale is re-invested then only 50% of the net taxable income will be subject to capital gains tax.

To calculate the taxable gain, you take the selling price, minus the acquisition costs, any costs incurred during the transfer of ownership, and also any property improvement costs that have incurred within 5 years of the sale.


Exceptions:


There are a few exceptions to Capital Gains Tax in Portugal:

  • If you are a tax resident of Portugal (Domiciled in Portugal) and you are selling your primary resident in Portugal and you buy another residence in Portugal. Importantly this rule applies for sales that are within 3 years after, or 2 years before.
  • If the property in question was first occupied before January 1989 in your name.
  • If you decide to reinvest the monies made from the sale of your Portugal primary residence into another primary residence in the EU, you are then able to roll over the costs.


Agency Fees are Tax deductable:


There are no agency fees paid by the buyer. In Portugal it is always the seller that pays the agency fees. As of July 2008 agency fees can be deducted as a sales expense from any capital gains realised from the sale of a property.


Inheritance Tax


Between close relatives there is no inheritance tax in Portugal. On gifts a 0.8% stamp duty based on the VPT must be calculated. Other situations of inheritance or gift are subject to a stamp duty at the rate of 10% of the VPT.

FISCAL REPRESENTATION

It is a legal requirement for all non-resident individual or companies who have assets based in Portugal to appoint a fiscal representative. Non-resident taxpayers who earn taxable income in Portugal & the Algarve are required to appoint a fiscal representative who guarantee’s that the non-resident is compliant with Portugal’s tax obligations.

The fiscal representative is a go between the Individual/Company who have the assets and the tax department. The fiscal representative is then jointly (with Individual/Company) for any tax calculations related to all of the Individual/Companies Portugal’s tax obligations (E.g. Property, bank accounts, cars, and income – all tax bills).

The tax authority with only work with/via the Individuals/Companies fiscal representative regarding, rental income declarations, valuations, IMI tax bills, etc.

Copyright © 2022 Andreia Cordeiro - All Rights Reserved.

Powered by GoDaddy

  • Blog
  • Política de privacidade

This website uses cookies.

We use cookies to analyze website traffic and optimize your website experience. By accepting our use of cookies, your data will be aggregated with all other user data.

DeclineAccept