The Promissory Contract (Contrato Promessa de Compra e Venda) contains all the terms and conditions of the purchase. A deposit is payable (directly to the seller, not held in escrow by the lawyers) usually of 10%, but this is negotiable. You’ll then set a completion date.
Your legal advisor should consult updated documents from the Land Registry and Tax Department to ensure the property is duly registered, that the sellers effectively own it, and that there is no charge registered against it. An energy efficiency certificate is mandatory for all urban properties, together with a utilization licence, which is issued by the Town Council. If the seller is a corporate entity, further searches may be required to ensure the signatory has the necessary powers on behalf of the company.
A Deed of Completion (Escritura) is signed by the parties or their representatives before a Notary, Solicitor or directly at the Land Registry. The remaining purchase price is due on this date, when ownership of the property is effectively transferred to the buyer. After completion, the purchase is registered at the Land Registry (Conservatória do Registo Predial) and Tax Department (Finanças).
The following taxes and costs are payable on the purchase of a property in Portugal:
Property transfer tax ("IMT")
This is based on a sliding scale, depending on the value of the property. The maximum rate for urban properties for habitation is 6%.
This is based on the property’s sale value, at a rate of 0.8%. Additional stamp duty is payable in the event of a loan, at a rate of 0.6% on the value of the loan.
The notary’s fees vary but are usually around €400
The cost of registration at the Land Registry is €250 (an additional €250 is payable for the registration of a mortgage).
When you sell a property in Portugal, no tax is payable on any capital gain so long as the money is reinvested in a permanent residence in Portugal or any country in the EU within 36 months. There are rules regarding partial reinvestment, with any gain taxed at 28%.
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