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Buying real estate, step by step

Have you finally found the house of your dreams? Your new vacation home? Or maybe a new investment property? To guide you through this process, we share with you the 6 steps to take into consideration before and after the purchase.

STEP 1: OBTAINING THE TAX IDENTIFICATION NUMBER (NIF)

In order to acquire a property in Portugal, once this process is subject to the payment of taxes, it´s necessary that you register with the Tax Administration, in order to obtain the respective tax identification number.
The tax identification number is a number destined exclusively for the processing of tax and customs information, and can be requested by any citizen, resident or not in the national territory, at any time.
You can obtain it in any service desk of the Tax and Customs Authority, or at the counters of the citizens stores that make this service available.

Necessary documents and requirements:
If you are a European citizen:
- Civil identification document or passport
- Proof of address in the country of origin (invoice for water, electricity, gas, etc ...)

If you are a citizen of a third country:
- Passport
- Proof of address in the country of origin (invoice for water, electricity, gas, etc ...)
- It is mandatory to have a tax representative (can be any Portuguese citizen or company with head office in Portugal)



STEP 2: LEGAL DOCUMENTS
Before starting the process of buying your new property, you must keep in mind all legal documentation regarding the property as well as the legitimacy of the seller. In the list that follows we present the documents to take into consideration:
i) Property Tax Document - Document issued by the Tax and Customs Authority, which includes, among others, the following data: identification and location of the property, the areas of the property, the tax value of the asset (for tax purposes), information on any existing exemptions, and the owner(s), depending on the situation.

ii) Certificate of the Land Registry (or certificate of content) - Document issued by the Land Registry Office which contains information on: the location and composition of the property, the owner(s), about any charges or encumbrances (mortgages, attachments, easements , usufruct, etc ...).

iii) License of Use - Document issued by the City Hall where the property is located, which certifies that the property has been inspected and is in the conditions required by law to be inhabited. In case of a building with construction prior to 1951, this document is not mandatory.

iv) Energy certificate - Document issued by authorized technicians by ADENE (National Energy Agency), which evaluates the energy efficiency of a property on an A + (very efficient) to F (inefficient) scale.

v) Technical file of housing - Document descriptive of the main technical and functional characteristics of a property. It is mandatory for real estate that has been built or undergone reconstruction, expansion or alteration works after March 30, 2004.

vi) Declaration of non-debt to the condominium - If you want to acquire a property that is inserted in a building under a horizontal property, you can request this document to the owner, in order to guarantee that there are no debts to the condominium until that date.



STEP 3: THE PROMISSORY CONTRACT OF PURCHASE AND SALE
After verifying all legal documentation of the property and legitimacy of the seller, let´s go to the next step: the signing of the promissory contract of purchase and sale. This contract is essential, although not mandatory, to ensure the purchase of your future property. It is a document signed by both parties (buyer and seller) that regulates and safeguards the rights and duties of each until the date of conclusion of the definitive purchase and sale agreement.


The following items should be included in the promissory contract of purchase and sale:
- Identification of the parties, (full name, marital status, civil identification number, tax identification number and address);
- Identification of the property (including the existence of parts related to the property, such as garage and storage room, for example, land registry number, article in the property tax document and the respective license of use (if applicable));
- Indication if there are any charges or encumbrances on the property;
- Purchase price and method of payment;
- Indication of the amount given as initial and down payment (usually between 15% and 20% of the acquisition value);
- Indication that the property will be transmitted free of any charges or encumbrances;
- Deadline for conclusion of the definitive purchase and sale agreement;
- Indication of sanctions to be applied in case the promissory contract of purchase and sale is not fulfilled by any of the parties.

Note: The promissory contract of purchase and sale should contain the parties signature duly recognized.



STEP 4: COSTS AND TAXES BEFORE AND AFTER THE PURCHASE

1º Notary costs: The notary costs can vary from notary to notary. Must be paid by the promissory buyer to the notary, after the conclusion of the definitive purchase and sale agreement.

2º IMT (Tax on the onerous transmissions of real estate): The calculation of this tax depends on several factors, namely:
- Location of the property (Mainland or Autonomous Regions)
- If the property is intended for own and permanent housing or secondary housing
- Affection (If it is a property for housing, commerce, etc ...)

Note: The calculation of this tax is based on the higher of two values: acquisition value or the tax value of the asset, and must be paid by the promisory buyer before the final purchase and sale agreement.

3º IS (Stamp Tax): This tax falls on all acts and contracts, including free transfers of assets. The acquisition of a property results in the application of the rate of 0.8% on the higher of two values: acquisition value or the tax value of the asset, and must be paid by the promissory buyer before the final purchase and sale agreement.

4º IMI (Municipal Property Tax): Tax that falls on the tax value of any urban or rural building located in the national territory. This tax is due by the owner, usufructuary or surface owner of the property as of December 31 of the year to which it relates, varying according to the municipality where it is located. The following rates are applied: between 0.3% and 0.5% for urban buildings, and 0.8% for rural buildings.

Note: There may be exemption of IMT and IMI in specific cases provided in the law.



STEP 5: THE DEFINITIVE PURCHASE AND SALE AGREEMENT (DEED)

Additionally to the documents referred to in "Step 2 - Legal Documents", the following documents are also required for the deed:
Seller
- Civil identification document or passport
- Banking Distract (If there is a mortgage registered)
- Declaration of the exercise of preference rights (if applicable)
Buyer
- Civil identification document or passport
- Proof of IMT payment
- Proof of IS payment
- Bank check in the remaining amount, to the owner´s order


STEP 6: INSURANCES
The purchase of a property implies the obligatory contracting of an insurance that covers the fire risk of the house and, if applicable, the common parts (roof, stairs, elevators, garage, etc ...). If you prefer, you can always opt for multi-risk insurance, although this is not mandatory. This insurance has a wider scope and may include risks of damages caused by earthquakes, floods, storms, robberies or thefts. If you require a mortgage loan, it is usually required by the banking institution that some insurance is contracted. Among them, the life insurance of the debtor in which the beneficiary is the bank. In addition, since the property is usually used as collateral for the loan, the bank also requires multi-risk insurance to protect the property from possible damages.


THIS INFORMATION IS NOT INTENDED TO BE A SUBSTITUTE FOR CONSULTING THE APPLICABLE LEGISLATION

Licence Partner Contact

Cascais

Rua Afonso Sanches 25b | 2750-282 Cascais
Portugal

Cascais

Rua Afonso Sanches 25b | 2750-282 Cascais
Portugal
Phone
+351 210 170 425


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