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Expenses and Taxes in Property Purchase
Expenses and Taxes in Property Purchase
Expenses and Taxes in Property Purchase
Expenses and Taxes in Property Purchase
You are going to buy a property in Portugal. What’s next?
Once you have chosen the property you want to buy, the process of purchasing a property, for your own residence or for any other purpose, has a significant impact on the lives of both the seller and the buyer. This decision-making moment involves a sequence of steps that will
eventually lead to the completion of the process.
Before making a final decision, the buyer must carefully check all documentation pertaining to the property. Enlisting the help of a real estate agent allows you to swiftly access and check all related documents. Checking the following items is highly recommended:
- Updated certificate issued by the Real Estate Registry;
- Property Tax Document (Caderneta Predial);
- Copy of the Property’s License for Use;
- Property Data Sheet (for residential properties);
- Valid Energy Certification.
Checking these documents is not always easy for the common buyer, therefore, professional
help must be sought in the process, usually a lawyer or a solicitor.
The purchase may be legalised by means of a public deed or a private document. You can do this at any of the following:
- Public or private notary;
- Real Estate Registry Office;
- Lawyer’s/Solicitor’s office;
- Bank Agency.
Buying or Selling
Buyer Guide
Real estate taxes
Non-Habitual Resident
Visa Gold
Property Management
You are going to buy a property in Portugal. What’s next?
Once you have chosen the property you want to buy, the process of purchasing a property, for your own residence or for any other purpose, has a significant impact on the lives of both the seller and the buyer. This decision-making moment involves a sequence of steps that will
eventually lead to the completion of the process.
Before making a final decision, the buyer must carefully check all documentation pertaining to the property. Enlisting the help of a real estate agent allows you to swiftly access and check all related documents. Checking the following items is highly recommended:
- Updated certificate issued by the Real Estate Registry;
- Property Tax Document (Caderneta Predial);
- Copy of the Property’s License for Use;
- Property Data Sheet (for residential properties);
- Valid Energy Certification.
Checking these documents is not always easy for the common buyer, therefore, professional
help must be sought in the process, usually a lawyer or a solicitor.
The purchase may be legalised by means of a public deed or a private document. You can do this at any of the following:
- Public or private notary;
- Real Estate Registry Office;
- Lawyer’s/Solicitor’s office;
- Bank Agency.
Buying or Selling
Buyer Guide
Real estate taxes
Non-Habitual Resident
Visa Gold
Property Management
You are going to buy a property in Portugal. What’s next?
Once you have chosen the property you want to buy, the process of purchasing a property, for your own residence or for any other purpose, has a significant impact on the lives of both the seller and the buyer. This decision-making moment involves a sequence of steps that will
eventually lead to the completion of the process.
Before making a final decision, the buyer must carefully check all documentation pertaining to the property. Enlisting the help of a real estate agent allows you to swiftly access and check all related documents. Checking the following items is highly recommended:
- Updated certificate issued by the Real Estate Registry;
- Property Tax Document (Caderneta Predial);
- Copy of the Property’s License for Use;
- Property Data Sheet (for residential properties);
- Valid Energy Certification.
Checking these documents is not always easy for the common buyer, therefore, professional
help must be sought in the process, usually a lawyer or a solicitor.
The purchase may be legalised by means of a public deed or a private document. You can do this at any of the following:
- Public or private notary;
- Real Estate Registry Office;
- Lawyer’s/Solicitor’s office;
- Bank Agency.
Buying or Selling
Buyer Guide
Real estate taxes
Non-Habitual Resident
Visa Gold
Property Management
You are going to buy a property in Portugal. What’s next?
Once you have chosen the property you want to buy, the process of purchasing a property, for your own residence or for any other purpose, has a significant impact on the lives of both the seller and the buyer. This decision-making moment involves a sequence of steps that will
eventually lead to the completion of the process.
Before making a final decision, the buyer must carefully check all documentation pertaining to the property. Enlisting the help of a real estate agent allows you to swiftly access and check all related documents. Checking the following items is highly recommended:
- Updated certificate issued by the Real Estate Registry;
- Property Tax Document (Caderneta Predial);
- Copy of the Property’s License for Use;
- Property Data Sheet (for residential properties);
- Valid Energy Certification.
Checking these documents is not always easy for the common buyer, therefore, professional
help must be sought in the process, usually a lawyer or a solicitor.
The purchase may be legalised by means of a public deed or a private document. You can do this at any of the following:
- Public or private notary;
- Real Estate Registry Office;
- Lawyer’s/Solicitor’s office;
- Bank Agency.
Buying or Selling
Buyer Guide
Real estate taxes
Non-Habitual Resident
Visa Gold
Property Management
The acquisition of a property is subject to taxes at the time of purchase, and subsequently, the property owner is liable for a municipal tax.
Thus, when purchasing a property, the new owner pays IMT (Municipal Property Transfer Tax), which corresponds to a percentage dependent on the acquisition value. It should be noted that the taxable amount is always the higher value between the transaction price and the property's tax value.
At the time of purchase, there is also a stamp duty, which corresponds to 0.8% of the acquisition value or the tax patrimonial value (whichever is higher).
These taxes are always settled before the signing of the purchase deed.
Examples:
- Primary Residence
- Second Home
- Land
- Commercial Shop
After the purchase, all property owners are required to pay an annual municipal tax called IMI (Municipal Property Tax), generally paid in the year following the acquisition as long as the property remains in their possession.
IMI is calculated based on the Taxable Patrimonial Value (Valor Patrimonial Tributável). The tax rate is approved annually by each municipality, with a minimum value of 0.35 and a maximum value of 0.40 applied to the aforementioned Taxable Patrimonial Value.
But how is the Taxable Patrimonial Value calculated?
The Taxable Patrimonial Value is calculated as follows:
TPV = Vc * A * Ca * Cl * Cq * Cv
The Construction Value (Vc) is a reference value based on the average construction cost per square meter approved by the Parliament/Government. The area of the property (A) includes all dependent areas that are part of the property.
In a third part, there are coefficients that can have a significant impact, notably the Allocation Coefficient (Ca), which ranges from 1.2 to 0.35 depending on the property's use:
Housing:
- Commercial Use
- Services Use
- Residential Use
- Social Housing subject to controlled cost regimes
- Warehouses and industrial activity
- Commerce and services in industrial-type buildings
- Covered and enclosed parking
- Covered and non-enclosed parking
- Uncovered parking
- Unlicensed properties in very poor habitability conditions
- Storage rooms
The coefficients for location (Cl), quality and comfort (Cq), and age (Cv) are also taken into account in the calculation of the Taxable Patrimonial Value.
Please note that the provided information is a summary, and it is advisable to consult with professionals or tax authorities for accurate and up-to-date information regarding specific cases.
|
Usage |
Coefficients |
|
Commerce |
1,20 |
|
Services |
1,10 |
|
Housing |
1,00 |
|
Social housing subject to legal controlled costs |
0,70 |
|
Warehouses and industrial activity |
0,60 |
|
Commerce and services in industrial-type construction |
0,80 |
|
Covered and enclosed parking |
0,40 |
|
Covered and non-enclosed parking |
0,15 |
|
Uncovered parking |
0,08 |
| Unlicensed buildings, in very poor habitability conditions |
0,45 |
|
Storage rooms and closets |
0,35 |
The location coefficient (Cl) varies between 0.4 and 3.5, and in situations of scattered housing in rural areas, it can be reduced to 0.35.
The determination of the location coefficient takes into account the following characteristics, namely: a) Accessibility, considering the quality and variety of road, rail, river, and sea routes; b) Proximity to social facilities, namely schools, public services, and commerce; c) Public transport services; d) Location in areas of high real estate market value.
The coefficient of quality and comfort (Cq) is applied to the base value of the built property and can be increased up to 1.7 or decreased to 0.5.
The coefficient has a different application when it comes to a property intended for housing, as shown in the table below.
TABEL I
Residential urban buildings
|
Elements of quality and comfort |
Coefficients |
|
Enhancing factors: |
|
|
Single-family houses |
Up to 0,20 |
|
Location in a gated community |
0,20 |
|
Individual garage |
0,04 |
|
Collective garage |
0,03 |
|
Individual swimming pool |
0,06 |
|
Collective swimming pool |
0,03 |
|
Tennis courts |
0,03 |
|
Other leisure facilities |
0,04 |
|
Construction quality |
Up to 0,15 |
|
Exceptional location |
Up to 0,10 |
|
Central air conditioning system |
0,03 |
|
Elevators in buildings with less than four floors |
0,02 |
|
Relative location and operability |
Up to 0,20 |
|
Reducing factors: |
|
|
Absence of kitchen |
0,10 |
|
Absence of sanitary facilities |
0,10 |
|
Absence of public or private water supply network |
0,08 |
|
Absence of public or private electricity supply network |
0,10 |
|
Absence of public or private gas supply network |
0,02 |
|
Absence of public or private sewage network |
0,05 |
|
Absence of paved streets |
0,03 |
|
Absence of elevator in buildings with more than three floors |
0,02 |
|
Existence of areas smaller than the regulatory standards |
0,05 |
|
Poor state of conservation |
Up to 0,05 |
|
Relative location and operability |
Up to 0,10 |
When it comes to properties intended for commerce, industry, and services, the coefficients are as follows:
TABEL I I
Urban buildings intended for commerce, industry, and services
|
Elements of quality and comfort |
Coefficients |
|
Enhancing factors: |
|
|
Location in a shopping center |
0,25 |
|
Location in office buildings |
0,10 |
|
Central air conditioning system |
0,10 |
|
Construction quality |
Up to 0,10 |
|
Existence of elevator(s) and/or escalator(s) |
0,03 |
|
Relative location and operability |
Up to 0,20 |
|
Reducing factors: |
|
|
Absence of sanitary facilities |
0,10 |
|
Absence of public or private water supply network |
0,08 |
|
Absence of public or private electricity supply network |
0,10 |
|
Absence of public or private sewage network |
0,05 |
|
Absence of paved streets |
0,03 |
|
Absence of elevator in buildings with more than three floors |
0,02 |
|
Poor state of conservation |
Up to 0,05 |
|
Relative location and operability |
Up to 0,10 |
Finally, the coefficient of obsolescence (Cv) is a function of the whole number of years elapsed since the date of issuance of the utilization license, if applicable, or the date of completion of the construction works, according to the following table.
|
Years |
Coeficcient Vetustez |
|
Less than 2 |
1 |
|
2 to 8 |
0,90 |
|
9 to 15 |
0,85 |
|
16 to 25 |
0,80 |
|
26 to 40 |
0,75 |
|
41 to 50 |
0,65 |
|
51 to 60 |
0,55 |
|
More than 60 |
0,40 |
