There are a number of legal steps required to purchase a property in Portugal:
- Surveying the property – If you are buying a resale property, a survey on the property is strongly recommended. A surveyor will inspect the property and prepare a report which will show any defects that may not always be visible. It will save any unpleasant surprises at a later stage.
- Property search – In order to make sure that the property you are buying has a good clean title, searches must be carried out in the following public departments: Conservatoria do Rigistro Predial ( Land Registry department). Reparticao de Financas (Finance Department) and the Camara Municipal (City Council)
- Promissory contract – In order to secure the deal, it is advisable and usual in Portugal to sign a promissory contract ”Contrato Promessa de Compra Venda”, whereby all conditions for the sale agreed with the vendor will be stated, including the completion date. A deposit is payable at the signature of the said contract and its amount is subject to agreement between the parties. At this stage you will need to decide whether you purchase the property in your name. A tax efficient way to purchase property must be looked into case by case.
- Completion – Completion is known in Portugal as ”Escritura Publica de Compra Venda” whereby ownership of the property is transferred to you. All the property documents must be submitted to the Notary, together with proof of payment of tax on the transfer of the property. This is known as Municipal Transfer Tax (IMT) whenever applicable. This ”escritura” is signed at the Notary on the date you have agreed to close the deal. At the same time the balance of the purchase price is paid to the vendor.
- Registration of new ownership – Even though you have become the new owner of the property when you signed the Escritura, it is the registration of the property in your name, at the Land Registry Department, which grants you full security of ownership.
- Drawing up of a will (detailed below)
Please be aware that your lawyer will guide you through the whole process. As complicated as it seems, it is a really simple process. All you have to do is enjoy your new Home in the Sun!
Drawing Up Of A Will
It is strongly recommended that once you have purchased a property in Portugal, you instruct you lawyer to prepare a will. You are allowed to have a will for your Portuguese assets only, without replacing the main will you may have in your own country.
Subject to the submission of appropriate documentation to the tax authorities, there will be no inheritance tax due in respect of Portuguese properties bequeathed to parents, children or between spouses in the event of death of the property owner or one of the joint owners in respect of married couples. Note that Inheritance tax, where applicable is known as Stamp tax in Portugal.