How to purchase real estate in Portugal

Portugal is still one of the most attractive European countries for real estate investment, and there is a bunch of reasons for that. The main purpose of purchasing real estate is for personal use (including for living in Portugal) or business development (commercial real estate). A granted residence permit in this country is a pleasant bonus in both cases.

The statistics, in particular the number of purchase transactions, confirms the attractiveness of Portuguese real estate for investing. Thus, about 2,500,000 transactions on the real estate purchase by foreigners are registered every quarter. The total amount of such transactions exceeds 800 million euros per quarter. The large Slavic diaspora that constitutes more than 50,000 residents remains a key factor. Since the second main language is English it is quite easy to establish communication. Yet another advantage of investing is the climatic conditions of this country because the summer in Portugal lasts more than 250 days.

 

It should also be taken into account that D7 prescribes a number of requirements, including the requirement to stay in the country for at least 183 days per year. Only non-EU countries foreigners can apply for such a visa. If we are talking about the first option, there are restrictions on the location of residential real estate.

How to make a transaction and do you need help?

The future owner shall be certain about the purchase and decide on the type of real estate and its location. The last criterion affects the cost the most. A purchaser needs to clearly understand what exactly they want - a land plot, a house, a flat or an apartment. It is also a good idea to have requirements for the condition of the real estate: a real estate ready for living or for repair/reconstruction.

A purchaser with poor knowledge of the local market may face certain challenges. Therefore, it is highly recommended that you have specialists in the field to support you. This will help you easily go through all the stages, in particular:

1. the process of choosing an object that best meets the purchaser`s needs;
2. reservation of real estate by entering into a preliminary agreement;
3. verification of both a purchaser and a seller;
4. signing the sales agreement;
5. drawing up a necessary set of documents with real estate registration.

If a purchaser wants to manage the process by themselves, they need to be physically present in the country at every stage. In the case of legal support of the process by an intermediary company, authorized representatives will do most of the work. Thanks to that you can arrive in the country at the stage of signing the agreement. No need to worry that an investor may face fraud since the activities of agencies that provide legal support for real estate transactions are strictly controlled by the state.

Assistance in choosing an object

You are free choose on your own, but chances are you will face dishonest sellers and hidden dangers. If the search and purchase process is backed by a lawyer, you will avoid challenges known only to local specialists.

The very process depends on the format chosen by an investor. It is not necessary to visit Portugal. The agency will choose and check the best offers, and a purchaser will consider them online (via photos and videos).

Real estate reservation process

Prior to entering into an agreement of intent, authorized representatives (lawyers) will open a bank account for a purchaser and obtain a tax number for them. After that, the agreement of intent (preliminary agreement), containing the terms of the deposit and the procedure for mutual settlements between the parties, will be signed. The amount of the advance payment usually makes 10-20% of the total cost. The agreement also contains terms for the repayment of the advance payment if a transaction fails for reasons beyond an investor`s control. A preliminary agreement describes the property and its current condition.

Conducting a legal audit

This bureaucratic procedure takes time. However, lawyers having rich experience in the real estate market in Portugal will help save time for the checking. This stage includes the verification of both parties to the sales agreements, as well as the payment by a purchaser of the ownership obtaining tax.

A purchaser will need to collect a set of mandatory documents:

• passport of an investor and their close family members;
• health insurance;
• a certificate of no criminal record in the country of real estate purchase;
• a certificate of no debts to the tax authorities of Portugal.

A set of documents for the audit will include a preliminary sales agreement, as well as several statements and consent to the audit. A set of documents for a residence permit will be collected as well.

Agreement signing procedure

The most important stage where you may need the help of specialists from the intermediary agency to be prepared. It is at this stage that the future real estate owner and investor in the Portuguese economy should visit this sunny country. No need to worry that something will go wrong since all checks and preparations will have already been made. A transaction will be drawn up by a notary, after which the balance of the real estate value will be transferred from the account of the new real estate owner.

Real estate registration

Once signed, a copy of the sales agreement should be sent to the land department for making appropriate changes in the cadaster with the entry of data of the new real estate owner. The data is also sent to the local tax office (Autoridade Tributária e Aduaneira), where the information is updated as well. The final stage of investor-lawyer cooperation is obtaining a Registration Certificate (Certidão permanente predial).

Expenses for the real estate purchase

In addition to the amount of investment in real estate, you will also have to pay some taxes and fees as part of a transaction:

• stamp duty – involves a tax in the amount of 0.8% of the value of the object;
• property transfer tax – up to 8%, depending on the size of the investment and the type of real estate object;
• notary's services - most often makes 1% of the cost;
• agency fee and legal support – up to 5%.

If one has experience in purchasing real estate, an investor can try to find an object and make an investment on their own. However, a lawyer knowing all the subtleties and challenges will make the process much easier. Having ordered a consultation, a purchaser will be aware of all stages, their duration, as well as extra costs. It is safe to say that the charge for intermediary services will be more than justified because each stage will be optimized in time.