YOUR ESSENTIAL GUIDE TO BUYING IN Portugal

Contents

Since 2007, we have been helping families, couples, individuals and investors find their ideal property abroad. With our website being updated daily with new properties, we are sure you will soon find your ideal property in Portugal. Over the past years we have built up a close relationship with leading overseas property agents and we work hard with them to ensure that we are able to showcase their properties to genuine interested buyers. Equally important to us is the desire to help our property buyers find the right property, and if required, guide them through the buying process. We are able to do this as we work closely with a number of companies and individuals based in Portugal who offer a range of services which are normally required when purchasing abroad. I am also proud to introduce our currency exchange company – Foremost Currency Group. I founded this company 10 years ago and to date we have helped over 15,000 customers transfer money abroad. Working in conjunction with estate agents we can ensure transfers tie in with purchase deposits and notário’s fees, enabling our clients to get better exchange rates than they would achieve by using their bank. We trust you find this guide helpful and informative, without making the process of buying in Portugal too daunting. Remember, our knowledgeable team of currency brokers are ready to share with you their in-depth market knowledge and help you on the road to securing your property abroad. We wish you success with your property search and encourage you to start your search today by visiting our property website www.foremostpropertygroup.co.uk. I am confident you will soon find your ideal property in Portugal.

FINDING A PROPERTY Create your brief 1. Property Location 2. Type of Property 3. Your budget Currency Exchange Start your search Estate Agents – Imobiliária Viewings

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BUYING THE PROPERTY – THE LEGAL PROCESS Residency

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FINANCE Inheritance Mortgages Taxes

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CASE STUDY

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Robin McEwen Managing Director

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FOREMOST PROPERTY GROUP: PORTUGAL BUYING GUIDE

Buying a property abroad is an exciting time, something that you may have dreamt of doing for years but it can be riddled with challenges particularly if you go into the process underprepared. At Foremost Property Group we speak to property buyers every day and while the vast majority of our customers have good experiences when buying abroad, sometimes things can go wrong. Our experience of working with property buyers over the years has enabled us to help many buyers resolve issues or complications relating to their purchase.

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We knew we wanted to buy in the Algarve, but weren’t sure if we wanted a new build or an existing apartment. We enquired about a number of properties through the Foremost Property Group website and very quickly we had two estate agents working hard to help us secure the right property. We decided to buy an existing apartment as we wanted to enjoy the property as soon as possible. As the estate agents have worked with the Foremost Group for years, our Foremost Currency Group broker was able to send our money over at a good rate until we paid our final instalment, making the whole searching and buying process enjoyable and not daunting. Thank you to all the team at Foremost.

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Mr and Mrs. Davies, 2016

To help our customers through this journey we have put together our essential countrybased guides to buying properties in popular destinations. The property buying process is different in every country and there can be an overwhelming amount of information on the web for you to sift through. We hope this Portugal

buying guide is a useful resource to ensure that your property buying adventure is a successful one.

GUIDE TO BUYING IN PORTUGAL

The property buying process in Portugal is straightforward, however regulations by the Portuguese government often means there is a high degree of bureaucracy involved. If you understand what to expect before beginning your search and engage an English speaking lawyer the process should be straightforward. Look for a lawyer who is working for you and doesn’t have conflicting loyalties, and who will make sure the property is free of debt and restrictive clauses.

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Porto & the North

Centro

FINDING A PROPERTY

Create your brief The key to a successful and stress-free property search is the ability for you to answer the following questions: Where do you want to buy? What are you looking for in a property? What is your budget?

Step 1: Property Location Mainland Portugal is divided into 5 main regions.

Lisbon

Alentejo

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Porto and the North – Porto is Portugal’s second largest city famous for its Port wine. The old sailing port of Porto was classified as a UNESCO World Heritage Site in 1996. Parts of the north are more mountainous and there are many traditional houses ripe for development at low prices, while the Douro River with its stunning scenery is considered prime real estate. Centro – The Silver Coast (Costa de Prata) is located in the centre of the country, 1-2 hours’ drive from Lisbon. It combines some of the best beaches, good weather and historic significance. It is also much less

developed than the Algarve. The inland mountains are dotted with schist villages, thermal springs and offer outdoor activities including tracks for mountain biking and walking, rock climbing, abseiling, rafting and canoeing. Lisbon – Portugal’s capital and the largest city in the country. This area offers a great range of cultural, shopping, leisure and sport activities. It also has some of the most stunning beaches in Europe. Alentejo – This region covers nearly a third of the country, is sparsely populated and has some of the lowest property prices in the country. It is the breadbasket of Portugal and makes half its wine and is the largest cork producer in the world. Along the coast the terrain is hilly and rugged, with small sheltered coves between the cliffs, many of which are ideal for surfing. Algarve – The most popular region of Portugal for foreign holiday makers as well as a thriving expat community. This is all thanks to the Mediterranean climate, numerous golden beaches along the rocky coastline landscape and picturesque castle towns and historic villages. It is also one of the best golfing regions in the world.

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FINDING A PROPERTY

Step 2: Type of Property

If you are not in a rush to buy, keep an eye on the property market over a period of a few months to see if houses sell well in the area you have chosen. This information could put you in a good negotiating position later. Consider what sort of property you want: permanent, holiday home, investment or business; accessibility from the UK; the amount of time you intend to spend there and of course your lifestyle. We recommend you start by creating a list that is divided into three categories. Essential (factors that you’re not willing to negotiate on) Preferred (features you would like to have – a wishlist) Must not have (factors that would knock a property out of the running e.g. being on the flight path of a busy airport)

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FINDING A PROPERTY

There are a number of other factors to consider. If relocating to Portugal then employment, schools, shops and healthcare services will be equally as important. You may want to consider what the local community is like. If you want to fully integrate into Portuguese life you will want to speak, or learn to speak, Portuguese fluently. Check the orientation of the property for sun. If you are in a valley and want to have your balcony drenched in sun you will need to work out if this will be possible all year round. Will you be inundated with tourists during the peak months? It is worth visiting the areas during these months to see how congested it can become.

Buying a new build

If you are buying an off-plan property in Portugal it is regulated and requires only a deposit (usually 10%) with staged payments throughout the build. Ensure that each stage is completed satisfactorily before making payments and obtain a bank guarantee to cover your stage payments. New builds also come with a five-year guarantee from the builder against structural defects. Many problems can arise when buying off-plan. There are a few things you can do to ensure it runs smoothly.

• Ensure your builder provides you with an insurance policy or banker’s termination guarantee, which protects buyers against the builder getting into financial difficulties before construction is completed

• Check with the Land Registry to make sure the land

• Once construction has finished ask for proof from

the seller that the construction has been finished in accordance with the description given in the plans. You can also check this with the Land Registry

Buying an existing property

To increase the housing markets and the money this brings in, developers are keen to attract new buyers, especially to buy in golf resorts. This means that the price of existing properties on the market will be effected as they are not the sought after property type. This may mean that property prices are high, but then it puts you in a good position to negotiate with the seller. Buying an existing property also has the benefits of being less risky, as you are not relying on a developer to be able to build the property and then deliver on time, but also you pay less Property Transfer Tax.

is registered to the developer

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FINDING A PROPERTY

Step 3: Your budget

If you are not a cash buyer, you will need to determine the amount you can afford as a deposit as well as taking into account what your mortgage repayments will be.

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There are also various fees associated with a mortgage – these typically amount to about 4% of the amount borrowed. Other costs to consider are those associated with any renovation and maintenance of the property.

There are a number of costs that come with buying property such as taxes and fees. In Portugal you don’t have to pay real estate agent’s fees but legal fees are around 1-2.5% of the purchase price. You will also need to pay for notary and registration fees which vary based on where the title deeds are located as well as stamp duty at 0.8%.

Take into account ongoing Service Charges when purchasing apartments or gated complexes. Owners pay for the upkeep of shared areas such as maintaining lifts, pools, gardens etc.

Property taxes include IMT (Property Transfer Tax which is based on a sliding scale from 1-8% of purchase price and IMI (Municipal Property Tax). In the case of a new property purchase, a Value Added Tax (IVA) of 23% is due instead of the Property Transfer Tax (IMT). Check to see if this is included in the agreed sale price.

One of the biggest mistakes buyers make is using the exchange rate at the point in time they start their search to determine their budget. The smallest fluctuations can have a huge impact on affordability.

Finally, consider what your maximum purchase price is taking all the above points into consideration.

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Make sure you obtain the best exchange rate when it comes to exchanging sterling to euros for your deposit and completion payments as well as any ongoing mortgage payments. Speak with our currency partner Foremost Currency Group on +44 (0)1442 892060 in the early stages of your purchase. Your own dedicated broker can guide you through a range of contract options and find one that offers you a host of advantages depending on your situation. The different options include: Spot Contract – The spot contract is the fastest way to exchange currency. As soon as you have found the property you want, you can contact Foremost Currency Group, agree a rate of exchange and instruct your dedicated broker where to send your euros. You then have two working days to transfer the sterling to Foremost Currency Group, then your euros can be sent. When your notário requests your property deposit, a spot is normally used. Limit Order – The limit order contract helps you get the rate you want. If you know what exchange rate you will need to buy that villa in the Algarve, you

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can instruct your Foremost Currency Group broker to purchase the euros automatically as soon as the market achieves this rate. A great option if time is on your side and you can afford to wait until the market moves in your favour. Stop Loss Order – The stop loss order contract protects you against a drop in the exchange rate. It allows you to buy currency if the exchange rate drops to a pre-determined minimum level. Combine it with a limit order and you can hold out for a better rate while protecting yourself from a sudden fall in the market – perfect for budgeting and forecasting. Forward Contract – The forward contract allows you to set the rate for up to 2 years. When your property price has been agreed but the completion date is still a few weeks or months away, a forward contract guarantees the price as the formalities are concluded, protecting you from any market volatility. Or if you feel that the exchange rate is at a high but you haven’t quite found the right property, you can use the forward contract to hold that rate of exchange for up to 2 years with just a 10% margin (payable within two working days) and then settle the balance before the contract expires.

Most customers choose to use both a spot and forward contract. This is beneficial as you can pay for your deposit and any fees using a spot contract, but you can also use a forward contract to secure the currency for your property further down the line. This combination of contracts provides peace of mind and the ability to budget accurately.

Speak to us today about the best currency option for you on +44 (0)1442 892060.

Purchase Date

FX Rate Fixed

Amount Saved

Currency Exchange

Currency Exchange

FX Rate

Currency Exchange

Length of Time

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Your Search

Start your search

Foremost Property Group’s property portal is the perfect place to start your search with thousands of properties in Portugal listed at any point in time. Through our website you will be able to see the types of properties available in the region, the price and the number of bedrooms. You will also be able to make a shortlist of properties that are of interest to you. When you enquire about any of these properties, your enquiry is sent directly to the Portuguese estate agent and they will contact you about your property search. You will also receive a phone call or email from our sister company – Foremost Currency Group, and one of our currency brokers will introduce our currency services and, if relevant, other partners who can assist you with your buying process. There are many other sources to find the perfect property such as the English language newspapers and portals, as well as Portuguese newspapers such as Publico, Correlo da Manha and Sol.

Estate Agents – Imobiliária

When you choose an estate agent, look for experience – ask how long they have been in the industry and operating in the region you are purchasing in. Determine at the beginning, well before your first viewing, if your agent is going to be reliable, enthusiastic and helpful. This can be determined by how quickly they respond to your emails before any viewing trips to Portugal. Estate Agencies are required to be licensed, insured and bonded under Portuguese law. Ask to see the licence prior to going out with an agent to view properties. Agents must also perform Due Diligence before listing properties for sale. They must investigate a property or development to ensure that everything promised is delivered upon sale as well as hold copies of a variety of documents to verify the property’s ownership status.

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Your Search

Viewings

Using an estate agent who knows the region well and can take you to multiple properties in a day is how most Brits find their property in Portugal. But many owners advertise their property directly in the newspapers or by putting up ‘for sale’ signs in the window that say ‘vende se’. Our website www.foremostpropertygroup.co.uk also has many private listings. Although you can save money by buying directly you should still engage a lawyer to carry out all the necessary searches.

Book a trip during the off-season as this is often a slower time for the estate agents, and sellers are more likely to negotiate a lower price when demand is low. Let the estate agent put an achievable viewing schedule together to make the most of your trip and see the best properties. We recommend up to 5 viewings a day and make sure you ask a lot of questions while the estate agent is taking you around. Find out about the local amenities, climate, crime rate etc. Take photos of the property and the surroundings and make sure you talk to the locals to get as much information as you can.

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Buying the Property

Buying the Property – The Legal Process Fiscal Number – Número de Identificação Fiscal (NIF) EU citizens do not need a Fiscal Number. All you need are ID documents and proof of address (such as passport, driving license and an invoice). This is a much cheaper way than obtaining a Fiscal Number and all you have to do is inform the tax office of your change of address when you move to Portugal. If you are not an EU citizen you will need to apply for a Fiscal Number by going to your local tax office (Repartição de Finanças) with your passport and paying no more than €10. Property Ownership in Portugal EU nationals can buy property and live freely in Portugal. If you are a non-EU citizen you may be able to buy property in Portugal but there are restrictions on the amount of time you spend there each year. One option is the Golden Visa.

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Residency

Residency for EU citizens is managed at the local town hall or at the Portuguese Immigration Service – Serviço de Estrangeiros e Fronteiras (SEF). Within the first 3 months of living in Portugal you must register your long-term presence in the country by applying for a Registration Certificate – Certificado de registo de cidadao da uniao Europeia. You will need to provide ID (passport), proof of address and fiscal number. Often your local town hall will require more documentation to prove that you won’t be a burden on the state. This registration certificate lasts for 5 years and after this you can visit the local SEF to request permanent residency. Golden Visa Non-EU citizens are able to obtain a full residency permit through the Golden Visa scheme. The Golden Visa is a fast track residency visa for foreign investors and falls into 3 investment categories: 1. Property Investment: a. Acquisition of property above €500,000; b. Acquisition of property above €350,000 – for properties more than 30 years old or located in areas of urban renovation.

Buying the Property

Buying the Property

2. Capital Investment: a. Transfer of Funds above €1,000,000; b. Transfer of Funds above €350,000 for research activities; c. Transfer of Funds above €250,000 for artistic or cultural activities; d. Transfer of Funds above €500,000 for capitalisation of small and medium size companies.

Promissory Contract – Contrato de Promessa de Compra e Venda When your verbal offer is accepted your lawyer will draw up a Promissory Contract with the seller. This contract outlines the agreed price and completion date for the purchase of the property.

A deposit – Entrada (normally 10-30% of the purchase price) secures the property and both the buyer and seller are protected. If you fail to complete the purchase you will lose your deposit and if the seller fails to complete the sale they must repay you twice the amount of your deposit.

If you are applying for a Portuguese mortgage we recommend that you obtain an offer from the bank before you sign the Promissory Contract and allow 90 days for the completion date in case there are any issues that may arise with getting the mortgage.

Land Registry Certificate (Certidão de Teor). Check with the Land Registry – Conservatória do Registo Predial – that the seller actually owns the property and also if it is free of charges and mortgages. A Registration Certificate should be issued with a time limit. The Registration Certificate describes the property’s legal history and proof of ownership. The Registration Certificate is required to perform the completion process at the notary’s office.

3. Job Creation: Creation of a minimum of 10 jobs For more information visit the Portuguese Immigration Service (SEF). Professional Legal Advice While you don’t need to understand Portuguese to purchase a property in Portugal it is highly advisable to engage an English speaking lawyer experienced in property law who does not have any conflicting loyalties and can protect your interests and carry out the necessary searches. In Portugal there are two types of legal representatives – Solicitadors or Advogados. A Solicitador is not the same as a British solicitor as they do not have to study for a degree but they are regulated by the Chamber of Solicitadores. A Soliticador will only perform the basic functions required to ensure a legal purchase.

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An Advogado is a lawyer and generally they don’t specialise in a particular aspect of law. However specialist property lawyers do exist and many British buyers find it more reassuring to go down this route. Lawyers study for 7 years at university and graduate with the title of Dr. They are regulated by the Portuguese Bar – Ordem dos Advogados. You can check that your lawyer is registered on this website www.oa.pt. The role of the lawyer is to see you through the entire property purchasing process including completing all the relevant searches and being present with you at the signing of the Public Deed of Sale and Purchase agreement. Reservation Form This isn’t used in all property purchase transactions and is usually entered into if there is a delay in the buying process e.g. a new build hasn’t yet been approved by the Town Hall. This Reservation Form gives confidence to the buyer as the property is taken off the market for a specified period of time. If the Promissory Contract is not signed before this period has ended then the property will go back on the market.

Make sure the Promissory Contract includes any conditions of sale that you have agreed with the seller and ensure you have covered any issues such as access and right of ways, utilities, boundaries, planning consents, surveys, completion of building work, connection of electricity etc. Your lawyer should ask the seller or estate agent to supply the following documents and they will need to cross reference this information with the tax office and land registry before you sign the promissory contract.

In Portugal a lot of land and older properties have been in families for centuries. Check that there are no family inheritance interests still attached to the property. All interested parties, no matter how small, need to agree to the sale.

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Buying the Property

Buying the Property

Housing Technical Datasheet (Ficha Tecnica de Habitação). Check that all building certificates are in order. The Ficha Tecnica de Habitação describes technical and functional information about the property such as builders’ details, materials used and who supplied them. This is only needed for houses that are built or altered after 30 March 2004.

permissions. Residential properties require a Licença de Habitação, all others require a Licença de Utilização. This Licence of Use document needs to be presented at the stage of signing the Promissory Contract.

Energy Certificate (Certificado Energético). This can be submitted by a certified engineer and it describes the efficiency of insulation and heat elements of the property.

Neighbours’ Right to Buy (Exercício de Direito de Preferência). This only applies to pieces of land Prédio Rustico or ‘urban articles’ (i.e. buildings that could be used for habitation) on a piece of land, Prédio Misto. Once the price and date for completion is agreed, the seller must inform all their neighbours (whose property borders the article for sale) by letter including your name, address and fiscal number, the place and date of the Public Deed of Sale and Purchase – Escritura and the agreed price. The seller must wait 8 days for an answer. If no answer is forthcoming, the law assumes that no one wants to buy the property.

Borehole and septic tank licence. If the property has these facilities a licence is needed.

Title Certificate Property Tax document (Caderneta Predial). Requested from the local tax office this document contains information about the property’s tax situation, the current owner and their fiscal number, a description of the property and the property’s unique fiscal number. It also details the taxable value of the property – Valor Tributavel. If the property is new then this official tax document will not exist and a temporary certificate will be issued by the building developer. Caderneta Rusticas is a similar document to the Caderneta Predial, but only for rustic properties. It gives the same information, but also identifies trees by type and size. Licence of Use (Licença de Habitação /Utilização). Obtain a copy of this licence from the Local Town Hall. The purpose of this licence is to certify that the house is built according to building regulations and to the approved architectural drawings and building 22

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If a neighbour wants to purchase the property they must be able to complete on the day that is already scheduled and pay the price already agreed. If this process is not followed then the neighbours may still have the right to buy, at the agreed price, in the future, even when the property has exchanged hands. Boundaries. It is recommended that you get a topographical survey done on the land and structures to ensure that the boundaries are correct.

Survey – Although a survey report isn’t a legal requirement in Portugal it is recommended that you obtain a survey when buying a property in Portugal. If there are any structural problems it will help you to negotiate the price or insist certain works be carried out before the house is purchased. Public Deed of Sale and Purchase – Escritura Pública de Compra e Venda The completion, Public Deed of Sale and Purchase – Escritura, will typically take between 30-90 days from the date the Promissory Contract was signed, but could be as quick as 14 days if no mortgage is needed. The Public Deed of Sale and Purchase must be signed in the presence of a notary – notário. The role of the notary is to certify Portuguese documents and agreements, ensuring they meet legal criteria. The notário is impartial and does not advise or protect the interests of the buyer or seller – this is the role of your lawyer.

Once the notário has checked that all the appropriate rules have been complied with and all searches completed, they will need to establish that all taxes have been paid. These include Land Transfer Tax – IMT and Stamp Duty – Imposto de Selo. They will also need to see that the remaining balance of the property purchase price has been paid to the seller and the notário fee has been paid. The Public Deed of Sale and Purchase can be now be signed by yourself, the seller and the notário. If you are able to be there in person then your lawyer should translate and explain the contents of the deeds to you. The notário will read the contents of the deeds aloud in Portuguese and they may not agree to sign the deeds unless they are happy you have understood the contents. If you are unable to attend this meeting then you lawyer can sign on your behalf if you grant them power of attorney. The Public Deed of Sale and Purchase is then printed in the official and public books of the notário. The notário will make as many certified copies as necessary and keep the original. The certified copies are the official proof that the transaction has been lawfully completed and the price paid in full. The copies will bear the official seal of the Notary Office. This document is not a ‘Title Deed’ as in English law. www.foremostpropertygroup.co.uk

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Buying the Property

Registration – Registo After the Public Deed of Sale and Purchase has been signed it has to be registered at the local Land Registry Office – Conservatória do Registo Predial. The lawyer or notary arranges this with the Land Registry in your name which ensures proof of legal ownership. It is recommended this happens immediately after completion. A certificate to prove ownership is issued along with the registration at the Land Registry Office and you are now the proud owner of a property in Portugal! Foreign & Commonwealth Office DO’s and DON’Ts The Foreign & Commonwealth Office provides a list of DO’s and DON’Ts to consider when buying a property in Portugal.

Buying the Property

DO • Make sure you are well informed about Portuguese procedures and have done all the necessary research in advance

• Insist on having sight of updated documents on title

• Make sure you use a properly qualified and

• Make sure that any alterations to the property

registered Estate Agent (always remember to ensure that they are licensed and have an AMI number). Also bear in mind that Estate Agents are representing the owners of the property they are selling.

• Engage an experienced and competent lawyer, preferably one who is independent of the lender, vendor and agent. Lawyers must be registered with the Portuguese Law Society – you can check this online. • Make sure you obtain an estimate in advance of all the fees and costs involved in the property purchase, including Lawyers’ fees, Notary fees, Property Transfer Tax, etc.

• Compare prices – shop around and ensure that you are getting the best deal possible.

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to ensure that the seller is the registered owner and has all the necessary licences in place, and make sure that your lawyer sees all the relevant documents. you are buying have been formally authorised and that the title deeds have been updated to reflect these changes.

• Make sure that anything you have verbally agreed with the seller during your negotiations is put in writing when you sign the promissory contract of purchase and sale.

• Make sure that any translations are true/legal. • Ensure that for new properties the developer has a good reputation and is financially sound.

• Make sure that a qualified surveyor inspects the

property prior to completion, whether it is a resale or a new build, and insist that any visible defects are immediately pointed out.

• Make sure that you are fully aware in advance

of all the costs involved in running the property you intend to buy e.g. condominium charges, management charges, annual municipal tax, etc.

DON’T

• Make any payments without insisting on receiving the necessary receipts.

• Be rushed into making a decision to purchase a

property – it is a lifetime commitment and you should insist on being given time to reflect on your options before making a binding decision.

• Purchase a property without having made at least one visit, even if it is just to see the building site – brochures are like postcards, they show only the positive aspects.

• Sign anything without understanding the contents. Changes to legal, finance and tax situations relating to property purchases can occur at any stage we recommend you contact a specialist for up-to-date information.

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Finance

Financial Matters Inheritance Inheritance tax was abolished in 2004. However beneficiaries to the assets (with the exception of the spouse, descendants and ascendants) have to pay Stamp Duty at 10%. Non-residents are advised to make a will just for the Portuguese assets. As each situation is different it is advisable to seek professional advice. Fiscal Representation If you are a non-resident you must appoint a Fiscal Representative who is responsible for your payment of IMI local property tax (IMI) and any income tax from rental properties.

Mortgages

Mortgages are offered by all the major Portuguese lenders to individuals purchasing a property that has a habitation license. The banks offer varying loan terms of up to 50 years for residents and 30 years for non-residents. The oldest age upon maturity of the loan can be as high as 70 or 80. Depending on the lender the maximum borrowing varies from 60 – 80% of the purchase/valuation price. Mortgages are available on a variable rate or fixed rate basis. Shop around and compare interest rates, terms and fees from a number of banks and financial institutions – both in the UK and in Portugal. When choosing between a euro loan and a sterling loan, be sure to take into account all costs, fees, interest rates and possible currency fluctuations as currency swings and devaluations can wipe out any interest rate gains. We recommend that you seek professional advice through mortgage brokers or your bank and speak to our currency partner, Foremost Currency Group, to see how you can reduce any exchange-rate risks. It is also useful to open a bank account in Portugal as soon as possible to pay bills, taxes etc. You will need to transfer sufficient funds into the account to cover your deposit when you sign the Promissory Contract.

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Finance

Taxes

To get the most out of your individual situation, we highly recommend that you seek independent professional tax advice. Income Tax You are liable to tax on your Portuguese sourced income generated from property at a 28% flat rate. You must declare this in your annual income tax declaration. Married couples are taxed jointly. The taxable income can be calculated as the gross rent minus any maintenance costs, related expenses, for example insurance premiums and the municipal tax and also any repair costs that may have arisen. You cannot deduct your interest costs from your mortgage which may have incurred when you bought the property.

Finance

Property Tax These include:

Municipal Property Tax – IMI – Isenãão de Imposto Municipal sobre Imóveis – This is the annual rates or council tax based on the registered value of the property.

• Rural property: 0.8% • Urban property: (not revalued since 2004): 0.4% to 0.8%.

• Urban property liable to the new valuation regime (revalued since 2004): 0.2% to 0.5%. (0.1-0.4%)

Some properties and buyers will be exempt from IMI. Check with local experts to see if this applies to you.

Capital Gains Tax

Residents of Portugal pay tax on only 50% of the gain, and if held for more than two years, inflation relief is given. The gains are added to all other income in that year and taxed at the tax scales up to 48%. For non-residents Capital Gains Tax on the sale of a property is 28%. You are exempt from Capital Gains Tax if: • You are a tax resident of Portugal and are selling your primary residence in Portugal to buy another residence in Portugal. This rule applies for sales that are within 3 years after, or 2 years before.

• The property you sold was occupied by you before January 1989 in your name.

• You decide to reinvest the money made from the

sale of your Portuguese primary residence into another primary residence in the EU, you are then able to roll over the costs.

Changes to legal, finance and tax situations relating to property purchases can occur at any stage we recommend you contact a specialist for up-to-date information.

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Case Study

Don’t forget to visit our website, www.foremostpropertygroup.co.uk we have thousands of properties to choose from. Read about our clients Lionel and Ann-Francis Gore and how our services benefitted their purchase abroad.

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We saved £3,000 using an €80,000 forward contract for European home purchase.

Lionel and Ann-Francis Gore recently sold their home of five years in Hornchurch, Essex, to make a permanent move abroad in pursuit of a more relaxed lifestyle. Planning ahead is key to making a move overseas, so Mr and Mrs Gore decided the best course of action would be to rent initially, allowing them to search for their dream home while being based in the country they wished to buy in. Keen to be able to budget effectively, they spoke to Foremost Currency Group to fix an exchange rate using a ‘forward contract’.

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“

By fixing a forward contract we were able to lock in the sterling/euro exchange rate while it was around the best it had been since 2007, meaning we now don’t have to worry what happens with the rate whilst we are shopping for a new home over the next few weeks,” says Lionel.

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We trust this property guide will help your property purchase abroad go smoothly.

“We know exactly what we have in euros to spend, which allows us to budget effectively. We were pleased that we fixed a rate while it was so good and by booking a forward contract rather than simply using the bank, overall we’ve saved more than £3,000.

For other services we recommend, visit foremostpropertygroup.co.uk/partners/ to view our list of services you may find useful when purchasing your home abroad.

TRUST

When buying your ideal property abroad you need to make the most of your currency Our knowledgeable brokers have helped over 15,000 customers move money abroad for property purchases. They understand the importance of timing transactions for your house deposit, final payments, renovations or ongoing payments. Don’t hesitate to speak to one of our brokers today to find how you can make the most of your currency.

Visit our website foremostcurrencygroup.co.uk or call +44 (0)1442 892060 The Foremost Currency Group Limited is authorised by the Financial Conduct Authority (FCA) for the issuing of electronic money under the Electronic Money Regulations 2011 [FRN 900204]. Registered in England: No 5544575. We are supervised by the FCA for compliance with the Money Laundering Regulations (MLR) 2007.

together we discover... Foremost Property Group Limited Sutton Court Church Yard Tring Herts HP23 5BB UK Email: [email protected]

www.foremostpropertygroup.co.uk Disclaimer. This guide is provided for general information purposes only and none of the information represents formal advice. Foremost Property Group cannot be held responsible for the consequences of decisions or actions you take throughout the process of purchasing a property. We strongly recommend that you seek independent advice at all stages of the buying process. Copyright © Foremost Property Group Limited, 2016. No part of this document may be reproduced, stored or transmitted in any form or by any means, electronic, photocopying or otherwise, without permission of Foremost Property Group Limited. Foremost Property Group Limited (Company No. 6271862) is owned and operated by The Foremost Currency Group Ltd (Company No. 5544575)