Purchase and ongoing costs Portugal

Purchase and ongoing costs Portugal

The “buyer’s fees” (also known as “notary fees”) generally include the total costs due in taxes and notary fees. These costs are twofold: one part the costs related to the purchase of the property and the second part related to the notarization of the mortgage. The amount of the total cost varies quite a bit in Portugal and depends on the amount of the purchase price. To illustrate: with a purchase price of €400,000 and a mortgage of €200,000, the cost is about 6.7% of the purchase price. Please contact Mortgage & Abroad if you would like a detailed calculation of the cost of buyer.

When buying existing construction, transfer tax – Imposto Municipal sobre a Transmissão Onerosa de Imóveis (IMT) – is due. It is calculated using a table, with the IMT being higher the higher the purchase price. For houses that are not the main residence, with a purchase price from €287,213, the percentage tax is 8% of the value -/- a flat rate of €11,035.25 (rate 2022). The tax rate is 6% for purchase prices from €550,836. In addition to the IMT, stamp duty, or Imposto de Selo, is also payable at 0.8% of the purchase price. In addition to the notary’s fee of approx. €500 are costs for recording the property in the registers of approx. € 465. The mortgage is also subject to stamp duty in the amount of 0.6% of the mortgage amount. In addition, the bank will also charge legal fees of approx. € 400.

New construction involves notary fees for the purchase of the land and costs associated with the notarization of the mortgage.

It is highly advisable to hire an attorney to assist you during the buying process. A lawyer performs an indispensable role and takes on many tasks that in the Netherlands are performed by the notary. A good lawyer more than recoups his fee. We can put you in touch with a good Dutch-speaking lawyer.

In addition to the cost of the buyer, other costs are often involved such as costs for an architectural inspection, the valuation, translations, legal, tax and financial advice and – if applicable – the formation costs of a Portuguese company.

Once you own the house, you owe local taxes annually. Basis of this tax is the tax value of the property and varies from municipality to municipality. The magnitude of this tax is between 0.7% and 1.3%. Also take into account the annual recurring costs, when purchased in a Portuguese company. Annual accounting and tax consulting fees are then involved.

The gain on sale tax is a tax meant to discourage property speculation and is due when you sell the house at a profit. Currently (2022), gains on sale are taxed at 28%.

About equity put into a Portuguese house, the tax treaty between the Netherlands and Portugal agrees that Portugal may in principle levy taxes on this. Specifically, although the house must be declared in the Netherlands in the tax return, a “double taxation avoidance” is applied that makes the net value of the house notincluded in the box 3 calculation. Portugal has no wealth tax like the Dutch box 3 levy. Portugal does levy a separate property tax on the value of the second home. An exemption of €600,000 applies here. Above that, an annual tax rate of 0.7% to 1% on the value of the house applies.

The Portuguese status of Residencia no habitual (RNH) gives those who become tax residents in Portugal and are accepted as RNH an exemption from paying income taxes both in Portugal and in the country of the source of income. This includes income such as pension, dividend, royalty and interest income. This status can be granted for a period of 10 years. Hypotheek & Buitenland has contacts with specialized tax specialists who can advise you on this.

You can find detailed information about Portuguese tax rules on the website of the Portuguese Tax Administration: https://www.acesso.gov.pt/unauthed/novoUtilizadorForm?partID=PFAP&path=/geral/dashboard it is necessary to register first with your NIF number, after which you will be sent an access code.