Real Estate in Portugal

Portugal is a popular destination for British citizens to buy real estate, whether as a holiday home or a property to retire to. There are no restrictions placed on a foreign purchaser of property in Portugal. 

Giambrone & Partners’ real estate team have extensive experience in dealing with a wide range of real estate in Portugal and can advise on both commercial and residential investment purchase.  Our expert lawyers will guide you through the procedure and protect your investment.

How the Property is Held

There is a range of property rights, the various ways to acquire an interest in a property, are as follows:

• Full ownership, the exclusive right of possessing the freehold.
• Surface right, the right to build a building on the land of a third party.  Such rights can be permanent or time-limited.
• Usufruct, the right to use and reside in a third party’s property for a set period of time, this right grants the beneficiary to enjoy and use the property in exactly the same way as the owner.
• Right of use, this provides a person with the right to use a third party’s property for their own needs or those of their family.

In order to buy a property in Portugal you must be a taxpayer, which requires the prospective purchaser to obtain a Portuguese taxpayer number, obtainable from a local tax office.  A non-EU citizen must appoint a professional as a tax representative in Portugal.

Costs Associated with the Purchase

The costs associated with property purchase, other than the purchase price of the property, are:

The Imposto Municipal sobre Transmissôes Onerosas de Imóveis (IMT) the property transfer tax

This tax is paid by the purchaser when there is a transfer of ownership of property in Portugal.  The amount varies between 1% to 8% depending on a number of factors, the purchase price, the location of the property and whether the property is the prospective owner's first or second home in Portugal.

Imposto de Selo  - Stamp Duty

          Stamp Duty is charged at 8% of the purchase price

Notary and Land Registry Fees

These fees generally amount to between 1% and 2% of the purchase price

The Transaction

The transaction is not dissimilar to that of property purchase in the UK.  Meticulous due diligence must be carried out by the purchaser to ensure the provenance of the property and the vendor’s right to sell. Also, to establish that there are no charges, tax debts, licenses, encumbrances or any other contracts or liabilities against the property.  The information required can be obtained from authorities such as the Land Registry Office but often the vendors can provide the appropriate documentation.

Transfer of ownership via a public deed executed by a public or private notary or an authenticated private document, which is registered with the respective Land Registry Office.

There are certain situations that arise that involve special consent. For example, if the property is part of a marital agreement.

The vendor’s warranties are governed by statute and relate to the condition of the building and such risks as asbestos.  The vendor must not sell a property that has such defects that renders the purchaser unable to make normal use of the property.  There must be no encumbrances if the vendor has specifically stated that there are none.  Should the purchaser discover that this is not the case the purchaser can ask for a refund and undertake legal action to void the sales and purchase agreement. 

Portugal does not have a mandatory format for a sales and purchase agreement (SPA) the parties are free to structure the agreement in any way they choose.  The document is subject to execution as a public deed or an authenticated private document and will require to be registered at the Land Registry.  Giambrone & Partners’  real estate lawyers will ensure that this important document has all the appropriate provisions, such as a detailed description of the property and execute the registrations required.

For further information or advice from our team of specialist lawyers, please click here