- The property was built in accordance with Portuguese laws and regulations;
- Areas in the legal documentation, so that the client can confirm that they correspond effectively to those that the property has and that no unauthorized changes have been made.
c) Technical inspection of the property
If you have any doubts or simply want a technical report made by an engineer (property structure, state of the project, defects, etc.), you should contact an engineer for this purpose (costs to be agreed directly with the engineer).
d) Promissory Contract of Purchase and Sale
After confirming that the legal documentation is in order, your lawyer will prepare the promissory contract of purchase.
At the time of signing the contract, a deposit is usually paid, between 10% and 30% of the price.
The contract is a document binding both parties, sellers and buyers, and contains the agreed terms and conditions, in detail and to ensure the guarantee of all the rights of the buyer.
The legal regime in Portugal establishes that if the buyer gives up the business, he loses the deposit already paid. If it is the seller who gives up, he is obliged to pay back the amount in double that he had previously received from the buyer as a deposit.
e) Deed of purchase and sale
The purchase is only finalized when the definitive deed is signed at the notary and the land register is made in the name of the buyer. At this point the entire price has to be paid (or the rest missing if a deposit has been paid before).
The price is usually transferred a few days before to your lawyer´s account and the same day is paid through a certified cashier´s check to the order of the seller, issued from the said lawyer´s bank account.
Taxes
The purchase of a property implies the payment of certain taxes. These are the taxes inherent in the purchase and ownership of a property in Portugal:
1. IMT and stamp duty
2. Notary and registration
3. Lawyer, real estate agent and engineer
4. Loan / mortgage costs
5. IMI
1. IMT and stamp duty
The IMT consists of a single payment made before the deed of sale and can go up to 6% when the property is intended for housing (the value of the tax depends on the type of property and its price).
When the property is intended for commerce or services, the rate to be applied is 6.5%. When it comes to rustic buildings, the rate is 5%. The Stamp Tax is also a one-time payment, made before the final deed, in the amount of 0.8% of the property price.
2. Notary and records
The notary costs about 500 € per deed (if you have loans, consider 2 deeds). Each registration costs around € 250. A simple buy and sell will cost around € 750.
3. Lawyer, real estate agent and other stakeholders
The fees payable to the professionals involved in the negociation, depend in each case, on the agreement between the professionals and the clientes. The lawyer´s fees take into account the price of the property and are usually between 1% and 2% plus VAT.
The commission of real estate agents, mostly is 5% plus VAT (Note that in Portugal who pays the commission to the agent is the seller).
4. Loan / mortgage costs
If the purchase involves a loan and consequent mortgage, you will still have to consider the stamp duty of 0.6% on the loan amount as well as all (variable) expenses of the bank process.
5. IMI
After purchase, the owner is responsible for the payment of IMI. This tax is paid by the property owner on the 31 December of the year to which it relates. The amount is calculated based on the equity value of the property and according to the rate defined annually by the respective City Hall.
Rates range from 0.3% to 0.5%, for rustic buildings is 0.8%. The equity value depends on several factors, such as type, location and age of the property.