FORMALITIES TO BUY A HOUSE
The acquisition of property in Portugal, because it is subject to the payment of taxes, requires that you register with the Tax Authorities to obtain the corresponding taxpayer identification number. Residents abroad, as well as those who, although resident in Portuguese territory, leave for more than six months, should appoint a representative residing in Portuguese territory for tax purposes. If you are a resident or if you are leaving for a member state of the European Union or the European Economic Area, the designation of this representative is merely optional.
The place of residence for tax purposes is the place of habitual residence or, in the case of citizens resident abroad, the place of residence for tax purposes corresponds to that of the tax representative.
In order to finalise the purchase of your house, you must submit various documents that identify the property and that confirm the legitimacy of the owner and the buyer.
LAND REGISTRY CERTIFICATE (CERTIDÃO DO REGISTO PREDIAL)
The information made available by the land registry tells you about the composition of a certain building, the legitimacy of the person intending to sell the property and the types of encumbrance that may affect it (mortgages, collateral, etc).
The land registry certificate may be requested in the following ways, in hard copy or in digital format:
TITLE CERTIFICATE (CADERNETA PREDIAL)
This document may be requested from any tax office. It contains information about the property’s tax situation and can be used to find out which entity is responsible for meeting fiscal obligations related to the property.
Property owners can get the title certificates for their properties from the tax authority website;
A title search of an article in the land registry may be requested instead of a title certificate (this is only valid for one year)
USAGE LICENCE (LICENÇA DE UTILIZAÇÃO)
The purpose of the Usage Licence is to certify the intended use of the property, and that it is suitable for its licensed purpose. This licence must be requested from the City Council of the district where the property is located. However, proof of the licence request may be submitted along with the purchase agreement if the licence is yet to be issued.
HOUSING TECHNICAL DATASHEET (FICHA TÉCNICA DE HABITAÇÃO)
The Housing Technical Datasheet is a document that describes the main technical and functional characteristics of a property. It must be requested directly from the City Council of the district where the property is located.
ENERGY CERTIFICATE (CERTIFICADO ENERGÉTICO)
This must be submitted by the property owner along with the purchase agreement.
PROOF OF PRIOR PAYMENT OF THE MUNICIPAL TAX ON PROPERTY TRANSACTIONS INVOLVING VALUABLE CONSIDERATION (GUIA COMPROVATIVO DO PAGAMENTO PRÉVIO DO IMPOSTO MUNICIPAL DE TRANSAÇÕES ONEROSAS DE IMÓVEIS)
PHOTOCOPIES OF THE ID CARDS (OR EQUIVALENT IDENTITY DOCUMENT) AND OF THE TAXPAYER CARDS OF THE CONTRACTING PARTIES
EXHIBITION OF A POWER OF ATTORNEY IF ANY PARTY IS REPRESENTED BY A PROXY
Keep in mind that situations may arise in which the so-called legal pre-emption right may apply to the property in question, which may be exercised by the City Council or by the Directorate General of Cultural Heritage, in the case of the sale of classified property or property pending classification or located in protected zones.
In these situations, you must obtain proof from the City Council or the Directorate General of Cultural Heritage that they have waived their respective legal pre-emption right (comprovativo da renúncia).
FIND OUT WHERE AND HOW YOU CAN BUY OR SELL A PROPERTY
- At any notary office – By entering into a public document, which is then obligatorily sent for registration at a Land Registry Office.
- At a Casa Pronta Service Desk – “Casa Pronta” is a one-stop service desk where you can carry out all operations relating to purchasing and selling property. At this desk it is possible to pay taxes, enter into the respective contracts, immediately make any registrations, request exemptions from the payment of municipal property taxes and request a change to tax domicile, etc. You can find an up-to-date list of land registry offices and services where the “Casa Pronta” service desk is available on the website.
- Other methods – through lawyers, chambers of commerce and industry or solicitors; through the Association of Real Estate Mediation Professionals and Companies (Porto, Coimbra, Lisbon and Vilamoura), provided that the service is requested by an associated company; through any of the real estate mediation companies forming part of the “Casa Pronta” service desk service.
Property purchases are concluded with a registration entry in the Land Registry Office. A certificate to prove ownership of the property is issued along with this registration entry.
Tables of notary and property registration costs can be found on the website of the Institute of Registers and Notaries.
Before moving on, you should know that the concept of property used in Portugal is “full ownership”, which is based on the full and exclusive right to use, enjoy and have immovable property at your disposal. This right gives the Portuguese property system an important competitive advantage.
IN THE AREA OF TAX LAW, YOU SHOULD KEEP IN MIND RELEVANT INFORMATION ABOUT TAXES, RATES AND BENEFITS APPLICABLE TO WEALTH.
The Municipal Tax on the Transfer of Property for a Valuable Consideration and Stamp Duty is charged on the acquisition of property.
WHAT IS THE MUNICIPAL TAX ON THE TRANSFER OF PROPERTY FOR A VALUABLE CONSIDERATION?
It is a tax charged on the transfer, for a valuable consideration, of property rights over immovable property or parts of this right (use and habitation, surface rights, usufruct, among others).
WHAT IS THIS TAX APPLIED TO?
It is applied to the value of the purchase contract or to the taxable value of the property, whichever is greater.
The tax is the result of the application of variable rates which, in the case of property exclusively for residential use, can vary between 0 and 6%. Property located in the Autonomous Regions of the Azores and Madeira benefits from reduced rates.
WHAT IS STAMP DUTY?
It is a tax applied to all acts, contacts, documents, deeds, papers and other legal factors or situations, including the transfer of goods free of charge. In the case of property purchases, it is applied to the value of the purchase contract, or to the taxable value of the property, whichever is greater. It is the result of the application of a 0.8% rate.
WHAT IS TAXABLE VALUE?
It is the value registered in the property register on the date of sale. In this register appears the description of the property, its location, its taxable value and the identity of its owners. Registers are updated annually on December 31.
WHO IS RESPONSIBLE FOR PAYING THE TAXES?
The interested party purchasing the property.
WHEN SHOULD THESE TAXES BE PAID?
They should be paid before the property purchase document is signed. If the transfer of ownership occurs overseas, the tax must be paid during the following month.
HOW ARE THE TAXES PAID?
They can be paid by visiting any Finance Service Office, through the Finance Website or at a Casa Pronta service desk.