Quick overview over the real estate market in Portugal

Having concluded the negotiations, the parties involved may enter into a promissory agreement in which they: set the deadline for the execution of the Final Deed (escritura) and any conditions that the parties must meet before then; set the amount of the down payment (sinal), which is usually of 10 to 30% of the total amount of the purchase (the down payment is not mandatory, but is strongly recommended);

The real estate purchase and sale contract i.e., the Final Deed must be seal in the Notary and must be preceded by the payment of the property transfer tax (IMT).

Finally, the property must be registered in the local property register office (Conservatória do Registo Predial).

Who will make sure that the real estate will be free of charges and taxes when you acquire ownership?

Registo Predial, through a certificate of property.

To what extent does the entry in the property register provide protection of the newly acquired property?

Total protection, except for the registrations requested before your registration.

After the registration of the property, no one can ask for a new registration on the same property.

Who will provide me with information on urban construction plans and limitations to construction/refurbishment works?

Town Council - Câmara Municipal - where the property is located will provide that information.

Legal advice is recommended.

Is there an obligation for a lawyer, notary, judge, or other public official to be involved at any stage of the procedure of purchasing or selling real estate?

To seal a real estate purchase and sale contract the Notary has to be involved in the process (a Notary Act – Deed – is always required) as well as the property register office, for the reason that after the Deed, the contract has to be registered in the local property register office (Conservatória do Registo Predial).

It is also mandatory to declare the purchase to tax authorities before the purchase, for the payment of the property transfer tax (IMT), and after the purchase, for the payment of the Municipal Rate (IMI).
Legal advice is recommended.

What ways are there for financing the acquisition of real estate (loans, mortgages etc.) and who will provide me with the relevant information?

The most frequent way of financing the acquisition of the real estate consists in mortgages loans (a loan secured by real property), or leasing contracts.

Financial institutions have real estate mortgages loans for non-citizens and can provide all the information.

A law firm can provide more details as well.

A law firm can provide you all the information.

How long will the entire process from concluding the sales contract to acquiring registered property normally take?

On the moment the parties sign the Deed, they can immediately register the property. The registration takes 2 weeks to 2 months to be concluded.

What are the duties and rights of the real estate agency that may be involved in the sale?

The real estate agent can represent either the seller or the buyer.

There are many types of agreements that can be established between the real estate agent and its client. Exclusivity clauses and indemnities for breaching the exclusivity are usually agreed between the parties. Written contract is mandatory.

The fees of the real estate agents can vary between 2% to 5% of the value of the purchase.

There are specific laws that regulate the real estate agents/agency activity, by instance real estate agents shall be registered in a public department and shall be insured.

Who will usually bear the real estate agency's fees?

The client, usually the seller.

Security of payments:

(a) How can the buyer secure the payment/transfer of the purchase price?

By the payment on the moment of notary deed, with check confirmed by bank.

By mortgage on the property at same time as the deed – both the mortgage and the deed (purchase and sale contract) must be sealed by a notary act.

(b) What regimes exist for securing my investment when the property I acquire is in the process of construction?

There is always a risk involved. However, to minimize the risk, during the construction, the buyer can sign the promissory contract setting a down payment. Later, after the construction is concluded, the buyer will sign the final contract. If, within the 2 contracts, the seller breaches the promissory contract, the buyer will be entitled to receive the double of the down payment.

The buyer can ask the seller for a bank guarantee, but usually the sellers don’t accept it.

What protection does the buyer have against (material or legal) defects of the purchased property and within what time limit will he or she have to claim such defects?

The buyer has the right to claim for defects in the building within 5 years after purchase. However, he has to use the right within 1 year from the moment he knows about the defect.

Costs of purchase, maintenance, use, and transfer:

(a) What taxes, charges and fees will arise apart from the purchase price?

Property Transfer Tax – for permanent residents the tax is free up to 85.500,00 €; From 85.500,00 € the tax depends on the amount of the purchase (it cannot be higher than 6%); Rustic property will be charged at a flat rate of 5% and commercial property or land for construction will be charged at a flat rate of 6.5%.

Notary fees plus stamp duty (which is paid with the Deed).

Register property fees.

(b) What costs arise when renting out the property?

Monthly maintenance (called a condominium), which varies from property to property, necessary repairing, insurance, property tax (IMI) and income tax (IRS).

Income tax (IRS) about the profit you had with the sale.

(d) What taxes, charges and fees will arise when inheriting the property?

Stamp duty (IS) of 10% of the value of the property, according to the tax authorities.

(e) What will be the running costs for maintaining the property per year?

Municipal tax - IMI – between 0,4 and 0,8 (depending on the region);

Normal maintaining costs - condominium, necessary repairing, insurance.

(f) Who can advise me on possible tax reductions/advantages with regard to purchasing, possessing, renting out and inheriting property abroad?

Law firms - Advogados

Are there any restrictions regarding time sharing?

Yes. We have a special law.

Are there any restrictions on the sale of real estate property?

Qualified buildings (old town buildings or old quarters of the main towns) have some restrictions. The seller has to notify the Town Council before the sale, because the Town Council has the right to prefer, that is, have the right to buy the property with the same price and conditions as the initial buyer.