Why should you buy a property in Portugal?
Portugal is one of the most popular countries for foreign property investment. There are several factors to this, such as:
- Low taxes for foreigners (non-habitual tax residents) - IRS exemptions on foreign source income, as well as a limited 20% taxation of income from employment and independent personal services.
- Portugal has been voted as the best place to retire in 2020 thanks to the low cost of living, climate and healthcare system in the country detailed in the latest report by International Living.
- A traditional but expat-friendly environment, with a great expat-community
- Affordable prices and high quality of life
- Business opportunities and proximity to the centre of Europe
- The housing market is booming - housing prices have been rising since 2014. According to the Global Property Guide, House prices rose by 4.5% in 2015, 4.8% in 2016, 4.6% in 2017, 6.1% in 2018 and 8.3% in 2019. Within the city of Lisbon, prices went up between 10% and 20% in one year, with the average value of premium homes hitting €630,000. This dynamism is due to investment from non-Portuguese people. In 2017, people from more than 50 different nationalities bought houses in Lisbon!
What do you need in order to buy a property in Portugal?
In Portugal, there are no restrictions on foreign property ownership. Besides, the purchasing process is pretty simple, but you do need to take some important steps. Check them below.
How is the process for buying a property in Portugal?
1. Find the right partners to help you with the process
You will need to get someone to represent and advise you, such as a lawyer. You can also get a currency specialist and a financial adviser. They will know about all of the legal details you need to follow to save time and money. You should also buy your property from a trustable real estate company. True Memories has a variety of projects you can choose to invest in.
2. Find the optimal property for you
First, you should decide what type of property you want and where. If you’re looking to invest in real estate for obtaining a Portuguese Golden Visa, you should acquire one or more properties or projects worth 500.000 Euros or exceeding (or 350.000 euros for certain projects). The best option here is to work with a trustable real estate company.
3. Get done with the purchase legal process
a. Documentation needed
- Land Registration Certificate - This document holds all the pertinent information of the property, the identity of the legal owner and reveals whether the property had an existing mortgage. You can ask for the land registry certificate and the simplified property information in a digital format from the online land registry.
- Legal building status - can also be requested in a tax office or through the tax authority online service.
- Finally, go see the municipal master plan (PDM) from the corresponding authority to make sure that there are no public works projects that could undermine the value of the property
b. The documentation you’ll need to sign
- Deposit agreement - This is the first contract you’ll sign, and a preliminary safeguard for the buyer’s and seller’s rights. You will pay a 10% deposit on the house, It means paying a 10% deposit on the house, and with this, you take on all the rights and responsibilities of a buyer. If you later decide to give up on the purchase, you will lose this down payment. If the seller is the one who cancels the sale, though, they will have to return the deposit to you.
- The title deed - The signing of this document will be done with the seller and buyer present, in front of a notary. The deed contains a description of the property along with any outstanding mortgages or charges on the house, the sale price and the payment method, and all taxes and expenses related to the sale. Remember to register the deed to the property at the land registry office.
c. Pay the transaction costs and taxes
The main taxes you’ll need to pay when buying a home in Portugal are the IMT Property Transfer Tax, VAT and Stamp Duty.
d. Change the name on the energy, water and gas bills.
Inform the energy companies and any other services providers that you are the new owner and will be paying the bills from now on.
These are all steps quite easy to make if you have a lawyer that can assist you to draw up the contracts and inspecting the property’s documentation. Also, as long as you make your investment through a trustable real estate company, the process will be
smooth for you. Talk to our team to learn about our real estate projects you can invest in.