7 Legal Pointers for Buying Property in the Algarve

Thursday, July 13, 2017

7 Legal Pointers for Buying Property in the Algarve

If you're considering buying a property in the Algarve, whether you're retiring, buying a holiday home or settling down, it's important that you're aware of the legal factors attached, which you can learn more about via our handy 7 point guide below.

1) Estate agents

In Portugal, as in the UK, real estate agencies only show their own listed properties and vendors might list their property with a maximum of three or four agencies. So, as a buyer, it is worth enquiring with several agents. There is the option to choose a single agent who will hunt for your ideal property using other agents and they then split any commission. Estate agents in Portugal should be licensed and registered with the Portuguese Government, which helps regulate their activity to protect buyers. Make sure that the agents you choose are duly registered.

2) Taxpayer identification number – NIF

In order to start the property purchase process, you will need to register with the Portuguese Fiscal Authorities and obtain Your Individual Taxpayer Identification Number, better known as Fiscal Number. 

3) Property purchase tax

Property purchase tax for foreign nationals is exactly the same as the property tax levied on Portuguese nationals. However, there is an incentive for those who choose to purchase their main home in Portugal and become a resident there.

4) Property tax - council rates

Again, property (council) tax rates for foreign nationals are exactly the same as for Portuguese nationals or residents. Property tax is based on the ‘ratable’ value of a property, a value assessed by the Portuguese Central Government.

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5) NHR - the Non-Habitual Residents scheme

In brief, this is a fiscal scheme applicable to all foreign individuals who become resident for fiscal purposes in Portugal or Portuguese Territory. In brief, it offers tax exemption status for pensions for a period of 10 years.

6) Short-term rentals - AL

In principle, all properties in all areas of Portugal can be rented out, as long as the owner applies for an ‘Alojamento Local’ (AL) licence. To do this, you must first make an application to the Portuguese Fiscal Authorities allowing you to start short-term rentals and then apply for your AL licence at your local town hall. It should be granted immediately but will be subject to a town hall inspection for continuation.

7) Representation

For the purchase process, it is advisable for you to hire the services of an independent lawyer who specialises in conveyancing. Once you have had an offer for a property accepted, your lawyer should take over the process, in order to give you the legal protection you need when buying abroad. Typically, lawyers charge 1-3 percent of the property’s price to represent you during the purchase price.

You can seek legal Portuguese representation with our English-speaking partner Paula Meireles, who practises out of her office in Lagoa, Algarve.

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