The world has changed, probably forever, and much more than any of us would like. But that change has fully reiterated what is paramount in our lives. If there were any doubts, the circumstances of 2020 have clearly demonstrated that the home we live in is, next to human ties, the most important element in our well-being and security. And, without any shadow of a doubt, in our health.
If it is true that every country reacted differently to the pandemic, it is equally true that our level of effort during quarantine was measured by the level of comfort of our home, whether it be a house or a flat, and its location. Hence it is fair to say that some confinements are much milder than others. Simply because the existence of a garden, a terrace or a balcony cannot be compared with its non-existence.
Because the old world, for the time being, is not coming back, and because all our outdoor living will have contingencies, it has never been more important than today to buy a house - the right house. That is why LUXIMOS Christie's, which is still here to help you, has anticipated your concerns and aggregated in this article the main expenses associated with buying a home.
LUXIMOS Christie's works permanently with a vast team of professionals who operate in all areas. Thus, it has jurists and partnerships with law societies, as well as with banking institutions, so that the property acquisition process can be dealt with in a simple way and without loss of time or bureaucracy for the client.
Remember that there are four main expenses to take into account when buying a house. And remember above all that more than selling a property, LUXIMOS Christie's wants your house to represent your maximum dream with the minimum of worries for you.
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IMT - Municipal Tax on Onerous Building Transfers
The Municipal Tax over the Onerous Transmissions of Real Estate (IMT) is the most important expense in the process of purchasing a property, but it is only paid once. It is the tax that is paid to the State whenever there is a transfer for consideration of the right of ownership of real estate located in Portugal, and varies according to the type of property (rustic or urban), location (mainland or islands) and purpose (own or secondary residence). This amount must be paid in advance, or at the time of purchase.
The exemption of the payment of IMT applies in case your property is located on the continent and has as purpose the permanent habitation with tributary patrimonial value or of deed inferior to 92 407€. Above this value, unless there are other exceptions, all properties will be taxed.
Stamp Duty (Imposto de Selo)
Stamp Duty is a consumption tax - and it is compulsory. It is paid at the time of signing the deed along with the IMT. Currently, the rate is set at 0.008%. Take this figure as a reference: if your property costs €500,000, the tax is €4,000.
If you need a bank loan, you will also have to pay stamp duty on the value of the credit. In that case, the tax is paid on the day the loan is made available. The rate is 0.006%, assuming that the mortgage has a contract of more than five years. As a reference if your credit is €400,000, the tax amount is €2,400.
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IMI - Municipal Property Tax
Unlike the previous tax, the Municipal Property Tax (IMI) is not an expense associated with the acquisition of the property. It is a tax that taxes who owns the property on the 31st of December of each year and, therefore, who buys and sells in the same year, is not even subject to IMI.
The IMI is a contribution paid to the municipality where the property is located. The amount of tax varies depending on the municipality, value, area and the age of the property. Once this amount is found, which is defined by the Finance Department, it will have little oscillation over the years.
In Portugal, this tax is always paid in the month of April. In cases where the value is over 250 euros, it can be paid in two instalments. If it is more than 500 euros, it can be paid in three instalments.
Deed (Escritura)
The deed is the contract that stipulates the terms and conditions of the purchase and sale of the property. Before signing it, you have to pay the IMT and present the proof of that payment, as well as the proof of liquidation of the Stamp Tax on the transaction.
In case there is a mortgage a representative of the bank must be present at the time of signing to assist and ensure the articulation of the process and availability of funds.
Registration at the Land Registry (Registo na Conservatória Predial)
Registering the property at the Land Registry is the last stage of the property acquisition process and is also compulsory. It is at the conservatória predial that the property is registered in your name. In a simplified form, we can say that it is the property identity card: it identifies the owners and the characteristics of the property and the existence of encumbrances. It can be done in person (250 euros), or over the internet, being slightly cheaper (225 euros). The registration of the acquisition, as a rule, is made by the Notary or Lawyer who executes the Deed of Sale or Private Authenticated Document.
Before the day of the deed, it is convenient to make a simulation of the global amount to pay. LUXIMO'S Christie's can also do this equation for you.
LUXIMOS Christie's International Real Estate, through its experienced legal department, provides a complete and personalized service, ensuring all the details of the various stages of the process, until the purchase of your home is successfully completed.
Related: Investments in the real estate market in times of COVID-19
