The legal requirements and process for selling a property in Portugal are very similar to those for purchasing.

Therefore it is important that all relevant documents are available and up to date and there are no outstanding charges against the property. (See list below of legal documents required to sell your property. If some of these documents are not in order, don’t worry we can assist you in checking the documents and to get them all updated and in order).      

Incomplete documentation and outstanding charges will delay the sale process, and in some instances this maybe for many months which in the worst scenario will put a buyer off.

Selling property can be simple, just ask us!

Legal documents required: (each property is a case therfore some of the below documents are not required)

• Copy of  IDENTITY CARD or PASSPORT or  RESIDENCE CARD and  FISCAL CARD or NIF (issued by the financial department)

• PROPERTY REGISTRATION CERTIFICATE  (CERTIDÃO DE REGISTO PREDIAL)  (Land registry document issued by the Land registry department “Conservatoria de Registo”, stating whom the property is registered to, the location and the description of the Property / Plot / Company / Commercial with sizes of the land and the house and will show any existing charges/loans or debt registered by a third party).

• COMPANY REGISTRATION CERTIFICATE (CERTIDÃO DE REGISTO COMERCIAL) (Doc. Issued by the Land registry department “Conservatoria de Registo”, stating all the company legal details)   

• FINANCE DEPARTMENT REGISTRATION (CERTIDÃO DE TEOR (old Caderneta  Predial Urbana or  Rustica) (property /document/booklet issued by the Finance department stating the description of the property / Plot / Comercial, area of construction, plot size and its fiscal value (rateable value) on which rates are charged).

• HABITATION LICENCE/CERTIFICATE OR CONSTRUCTION LICENCE: (this document is issued by the local Town Council, confirms that the property was or is being built according to the local Council plans and specifications and that the   property has been inspected for habitation upon completion).

• OR, Doc. Issued by the council Stating the property was built pre 1951

• Copy of the last 5 years Invoices of IMI (Property / Plot RATES) (old contribuição autarquica): payment receipts are issued by the finance department. Calculations are one year in arrears, usually payable in two parts, April and September. Upon purchasing a property a financial adjustment to the date of sale will be made to allow for the arrears amount.

• Copy of the last  month invoices for Water / Electricity (EDP) / Gas / Telephone / Condominium charges  

• Copy of CONSTRUCTION PLANS and LOCATION PLANS (to check that what has been built or is being built is in accordance with the original approved plans). 

• Copy of the PURCHASING DEED (This document indicates the title of acquisition of a property and its purchased value).

• Copy of Technical Specification of construction of property (FICHA TECNICA DA HABITAÇÃO):Document issued by the Builder indicating all materials used on the construction for all properties built after July 2004

• BOREHOLE LICENCE / LICENÇA PARA CAPTAÇÃO DE AGUA: (This document confirms the borehole is registered with the relevant authority)

• Copy of  ENERGY PERFORMANCE CERTIFICATE -  (Law applicable from 1^st January 2009, the energy performance certificate – EPC,  will be required whenever a building is built, sold or rented out)

•  Copy of Environment Certificate / Certificado Hambiental (only applicable for properties building projects submitted to local council since the 1st July 2008).

• Copy of ENERGY SAVING MANUAL (Manual de Utilização) (only applicable for properties building projects submitted to local council since the 1st July 2008).

Selling your property is basically a two stage process;

              1) To find a buyer who is in position to sign a promissory contract and

              2) to sign the final deed -  which is the completion of the transaction

Before getting into the step by step details, it is important that all relevant documents of the property are available and up to date and there are no outstanding charges against the property. Incomplete documentation and outstanding charges will delay the sale process and no one wants this.

• Step 1) Appoint an estate agent for an accurate valuation

The first step in selling your property is to appoint an estate agent, who’ll value your home and agreeing the commission fee, should you accept it, they will prepare the marketing strategies and show it to potential buyers.

• There are two ways you can appoint an estate agent  

Sole agency is where you give the job of selling your property to a single estate agent for a fixed period of time,  as per the real estate contract signed by both parties.

Multiple agency is where you instruct several estate agents at the same time, who will all try to sell your property during a fixed period of time, as per the real estate contrat signed by both parties. 

• Step 2: Presenting your property    

If you want a successful, quick sale, the client first impression of your property count for a lot. Make sure your house is spotless. (see our tips of "How to show your home") 

A few hours spent making your property look its best or even spending a bit of money to clear up some niggling problems. Making your home more saleable. We can offer recommendations if required.

You’re ready for your estate agent to start showing buyers round

• Step 3: Agree the sale

As your estate agent, we will start to generate offers from interested buyers. We will present each offer to you and negotiate on your behalf to get the best result. We'll provide all the help and advice we can, to help you make the right decision. 

Once the offer is accepted your lawyer/solicitor enters into action: He/she will contact the buyers lawer and send out copies of all required updated legal documents to the buyer's lawyer/solicitor who will then carry out preliminary enquiry and send out a draft contract to your laywer. At this stage you will also be able to agree on dates for the survey on your property (should the buyer request one), agree on the date for exchange of promissory contract (contrato de promessa compra e venda) indicating the agreed values  and other conditions and proposed date for completion, to sign the final Deed (Escritura).

There are no legal obligations until promissory contract is signed, but after you’ve formally exchanged contracts (promissory contract), you’re legally obliged to sell the property to your chosen buyer and they’re obliged to buy it from you, for the price agreed in the promissory contract. 

• Step 4: Complete the sale

With the signature of final deed (Escritura), the sale of the property and the change of ownership will be registered at the local land registry.   

The sale of your property is now complete – congratulations 

When you sell a property in Portugal you have the following expenses to consider: 

• Real estate fees;  

 These are usually 5% of the purchase price, plus IVA at 23% (the equivalent of VAT).

• Lawyer fees(Honorarios do Advogado):

 These are usually 1% of the purchase price, plus IVA at 23% (the equivalent of VAT).

• Capital gains tax (Imposto sobre as mais valias) 

You will have to pay capital gains tax when you sell your Portuguese property, unless you bought and registered it before January 1989.

Portugal residents pay tax on only 50% of the gain and, if you have had the property for more than two years, you get inflation relief. Gains are added to your other annual income and taxed at the scale rates of up to 48%. (depending on your annual income).

However, gains from selling your main home are exempt for residents if you reinvest all the proceeds (net of any mortgage on the property) in another main home in Portugal or the EU/EEA within 36 months after date of disposal or 24 months before. You will have to live in the new property within six months.

Non-residents pay tax on the whole gain at 28% after deducting the acquisition cost adjusted for depreciation and increased by the official inflation coefficient, costs of transferring ownership such as; (notary, registration, purchase taxes, lawyers), plus any improvement costs incurred in the last 12 years prior to the sale (with proper invoices) and the real estate commission when used to sell the property. An EU resident can choose to be taxed as a Portugal resident but you have to declare your worldwide income in Portugal to calculate the marginal rate of tax that will apply.

UK residents also pay tax on the gain in the UK, but under the terms of the double tax treaty, any tax paid in Portugal can be credited against the tax due in the UK.

• Inheritance and Gift Taxation (Imposto sobre as sucessões e doações)

If you die owning the property, or gift it during your lifetime, recipients will have to pay Portuguese stamp duty at 10% regardless of your residency situation - unless they are your spouse or child, in which case they are exempt (under portuguese law). Stamp duty is payable even if the recipient does not live in Portugal.

If you are a UK domicile, as most British expatriates are, your Portugal property, along with other Portuguese assets, will form part of your estate for UK inheritance tax purposes.

OBS: Whether you are living in Portugal or just own property here, UK nationals should always seek guidance from someone experienced in both Portuguese and UK tax and how they interact. Specialist, personalised advice will ensure unexpected taxes do not catch you out, and that taxation is mitigated wherever possible.

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice.

Posted by PORTUGALPRESS on April 18, 2016