Vernon | How to Sell
Need Help? Give us a call!
+351 912 511 631
+351 916 172 113
Tips for selling a property in Portugal

List your property with us!

If you're planning to sell your property in the Algarve, it is important to be with the right estate agent. At Vernon, we focus on personalization. With 31 years of experience, our values, approach to business, high qualified, dedicated multilingual team and knowledge of the region is what sets us apart.

 

We will do what we know better, which is helping you sell, your home.

We will provide you with a free market valuation (based in our professional opinion, years of experience and knowledge of the current market situation), explain the different marketing strategies and personalised plans to encompass traditional methods alongside social media, digital and virtual viewings.

We will guide you through the sales process and you can be assured of a knowledgeable and personalised service.

 

We’ve been selling properties in the Algarve since 1990, we know what works and how to show your property.

We need to correctly price your home on the market to find a buyer and secure the best possible price.

 

By place your property with us,

• we will give it the best exposure possible, using all new networking tools, quality photography, videos, 3D virtual tours as well as video calls.
• Our listings appear on all the main national & international web portals
• We promote in the social media, Facebook, Instagram, Twitter
• We work together (sharing our listings) with national and international partners (England, France, Sweden, Norway, Holland, Germany, Poland, USA.)
• We have an active database with thousands of potential buyers that increases day by day

 

You know how great your home is, but when you sell your property, you have to convince someone else as well. And we get so used to the places we live in, that sometimes is hard to see them through others’ eyes. But if you want a successful, quick sale, that’s exactly what you have to do, and first impressions count for a lot.

 

Lets make your home more saleable.

A few hours spent making your property look its best or even spending a bit of money to clear up some niggling problems, add a fresh coat of paint where necessary and try to declutter to make rooms appear larger.  We can offer recommendations if required.

 

Our first sugestion is: Presenting your property:  

Here are a few tips to get you started;

  • Think like a buyer (look at your house with buyer eyes) 
  • Reduce clutter (your rooms need to look spacious  
  • Decorate neutrally, keep it light  (remove personal items like; photos, religious items)
  • Make sure your house is spotless / Stage your home as a show room
  • Make the house smell good
  • Keep it light  (open windows, curtains, get lights on if needed) 
  • If possible take your pets with you or keep them away of the property during a visit 
  • Outside and in – buyers will often walk or drive past first, and fresh paintwork and well cared for outside spaces make a great first impression.

Tip: Treat everyday like there will be a viewing, so you are always ready no matter what, to show your home to potential buyers!

 

Whether you are relocating to another area or country, wish to release some of your capital, or just fancy a change of property, selling your home quickly should be through a convenient and effective medium.

 

Wherever your property is situated in Algarve and whatever style of property you own, if you are looking to sell, then contact us.

We would be pleased to meet with you and discuss our marketing strategy. We’ll help with every stage of your sale, from valuation to marketing and conveyance.

 

Get in touch today to organize a market valuation and to see how we can help!

 

 

 


Portugal - Real estate Capital Gain Tax

Capital gains tax (Imposto sobre Mais-Valias) - 

Capital gain Tax (Imposto sobre Mais -Valias) - If you acquired the property before 1 January 1989 it is not liable for capital gains tax.  CGT applies when selling any Portuguese property bought after 1988.

 

To calculate the taxable gain, you take the selling price, minus the acquisition costs, any costs incurred during the transfer of ownership, and also any property improvement costs that have incurred within twelve years of the sale.

 

For residents of Portugal, the gains are added to your other annual income and taxed at the standard IRS tax rates between 14.5% and 48% (see table below), but only 50% of the gain is taxable and if you have owned the property for two years, you are eligible for inflation relief.

Residents are subject to Portuguese capital gains tax on their worldwide real estate gains.

The taxable amount is treated as income. You add it to the other income you earn in the tax (calendar) year in which you sell the property, and are taxed at the scale rates of income tax.  For 2023 income, the rates are:

Total income for year Tax rate
€0 – €7,479 14.5%
€7,479 – €11,284 23%
€11,284 – €15,992 26.5%
€15,992 – €20,700 28.5%
€20,700 – €26,355 35%
€26,355 – €38,632 37%
€38,632 – €50,483 43.5%
€50,483 – €78,834 45%
Over €78,834 48%

 

 

When you sell a property that has been your main home, you may escape capital gains tax completely depending on circumstances and what you do with the proceeds. There are two reliefs available (both can be claimed):

Main residence reliefs – the rollover rules

  - Capital gain tax does not apply if a resident of Portugal is selling a primary residence / main Home and using the proceeds (net of any mortgage taken out to acquire it) to buy another residence/main home within Portugal or in another EU or European Economic Area (EEA) member state, which exchanges tax information with Portugal. This relief therefore no longer applies when selling your Portugal home to move back to the UK.

 

 - You need to purchase your new residence within 36 months after selling the first one or 24 months before. You (or your immediate family) must then live in the property within six months of the end of the three-year limit.  If you don’t meet these time limits, any tax payable as a result of the shortfall will become due – together with penalties and interest for late payment.

 

  - Reinvestment in land on which the new main home is to be built also qualifies (within the above time limits). The building work must commence within six months of the end of the three-year limit and you must apply to register the property within two years after building works commences and move in within five years of completion.

 

   - The property must be in your name, and not in a company. It’s advisable to have ‘history’ in it. E.g., being registered as your address with the local authority, utility companies and on tax returns.

 

Reinvestment in a long-term savings plan / pension

   - If you are either retired or aged over 65, you can also receive an exemption if you reinvest gains in an eligible insurance contract or pension fund within six months of the sale.

   - When reinvesting in a pension, you must receive a maximum annual payment of 7.5% of the value of the funds invested. 

   - You need to indicate your intention to invest the funds fully or partially in your tax return for the year concerned.

   - Life assurance policies – where you can hold a wide range of investment assets within its tax-efficient structure 

 

Therefore, if you are selling your main home and do not wish reinvest the entire proceeds into a new home (for example if you are buying a smaller, more manageable property), you can invest the unused balance in a life assurance policy and benefit from the exemption.

 

Capital gains tax on Portuguese property owned by non-residents

Under Portugal’s current law, if you are not a resident of Portugal and sell a property in Portugal, the entire gain is taxable.

    - Non-resident individuals are taxed at 28%.

    - Non-resident companies are subject to Portuguese corporation tax of 25%.

    - Non-resident companies located in a tax haven are taxable at 35%.

 

If you are resident elsewhere in the EU, or in an EEA state with a tax information treaty with Portugal, you may opt to be taxed as a Portugal resident instead. Note, however, that you will have to declare your worldwide income (see list below) in Portugal to calculate the marginal rate of tax that applies to the gain, so it only benefits those with very low income.

  • Salaries and equivalents
  • Pensions
  • Freelancer or self-employed income
  • Dividends
  • Rental income
  • Interests
  • Capital gains (including crypto and financial portfolios)

 

OBS:

Until 2022 real estate capital gains obtained in Portugal by non-residents were taxed autonomously at the special IRS rate of 28%, except when residing in a Member State of the EU or the European Economic Area and opting to be taxed according to the progressive rates applicable to residents in Portugal from 14.5% to 48%, plus the additional solidarity rate for taxable income exceeding EUR 80,000 (applicable on the exceeding part).

However, while in the case of residents the amount subject to taxation corresponded to 50% of the net capital gain obtained, the same criterion was not adopted for non-residents whose capital gains were fully subject to taxation, in clear breach of European law as confirmed by the Portuguese tax courts, without clarifying, however, whether, even if considered at only 50%, they should continue to be taxed at 28% or be taxed according to the progressive IRS rates applicable to residents.

In the meantime, these rules have been amended by the State Budget laws for 2022 and 2023, imposing their compulsory aggregation as from 2023.

Following these law changes and as a result of the aforementioned case law, the Portuguese Tax Authority has clarified the tax framework of the real estate capital gains obtained by non-residents through Circular Letter no. 20255, of 14 April 2023, as follows:

        -- Until 31/12/2022, net real estate capital gains are considered at only 50% of their value and taxed autonomously at the special rate of 28%;

        -- As from 01/01/2023, real estate capital gains will have to be compulsorily aggregated (at 50% of their value) with the other income obtained by non-residents, and will be subject to the corresponding progressive rates of IRS.

 

Portugal capital gains tax for non-habitual residents (NHR)

Those with NHR status avoid liability for capital gains tax on certain foreign source gains, depending on which country has the taxing rights under the terms of the double tax treaty. Where the gain is taxable in the source country – such as with UK real estate – there is no liability in Portugal for non-habitual residents.

Gains are ‘exempt with progression’, however, so are still added to your annual taxable income to calculate your effective Portuguese tax rate. So, although not directly taxable, the gain could increase your overall tax bill.

 

*This article is provided for general information purposes only and is not intended to be, nor should it be construed as, legal or professional advice of any kind. 

Read More

All the legal requirements and documents for selling a property in Portugal

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 1st 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).

 

Read More

Step-by-step guide to selling property in Portugal

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 




Read More

What taxes and cost are incurred in selling a property in Portugal

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

1.  Real estate fees; These are usually 5% of the purchase price, plus IVA at 23% (the equivalent of VAT).

 

2.  Lawyer fees(Honorarios do Advogado): These are usually 1% of the purchase price, plus IVA at 23% (the equivalent of VAT).

 

3.  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 currently between 14.5% (for income under €7,479) to 48% (on income over €78,834). 

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 C.G. tax on the whole gain at 28% (25% for companies) 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.

         - If you are an EU resident, you can choose to be taxed as a Portuguese resident instead, but you have to declare your worldwide income in Portugal (see below) to calculate the applicable tax rate.  

  • Salaries and equivalents
  • Pensions
  • Freelancer or self-employed income
  • Dividends
  • Rental income
  • Interests
  • Capital gains (including crypto and financial portfolios)

         

         - 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.

 

 

4. 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.

 

 

Read More