It is a straightforward process provided you stick to the letter of the law and are advised or represented only by competent and reputable specialists who are fluent in a language you understand.

* Deal with an Estate Agent who is Government Licensed (Mediador Autorizado) with an AMI Number and whose conduct is subject to enforceable rules. The Algarve Property Group is a legally formed Association , all our members are Government Licensed, and we have a Code of Conduct which forms the basis of our Customer Services Charter.

* Deal only with Lawyers and Solicitors (Advogados or Solicitadores) who are fully qualified and whose conduct the Portuguese Law Society controls. Never use a Lawyer who is acting for the seller or a Lawyer who shares the same office as the seller's Lawyer.You can give your Lawyer or anyone else specific power of attorney to sign documents on your behalf, but closely follow that the proper steps are being taken without any undue delay. Lawyers fees are generally between 1.5 and 2% of the purchase price of the property.

* Deal with a local Chartered Surveyor who can ensure the Purchaser can understand the nature of the property he is purchasing and will also highlight any likely liability for future repairs.

SEARCHES:
Having chosen a property, have your representative search the local Land Registry (Conservatora do Registo Predial) to check that the seller (vendedor) has clear title of ownership, that no one else has rights, charges or mortgages over it. Also check that what is registered conforms to what is actually built as well as the area of land.

FISCAL NUMBER:
Your Lawyer will apply for a fiscal number (numero de contribuinte) at the local Tax (Finanças) office as you must have one to purchase a property.It will come in the form of a card, which you will need for payment of annual property taxes or to open a Portuguese Bank Account.

TAX DOCUMENT:
Obtain the official tax document (caderneta predial) relating to the property from the seller and check that the description of the property (number of rooms, area of house, area of land, etc) is the same as in the land registry.

USAGE LICENCE:
Obtain a copy of the usage licence (licença de utilizaçao) from the local town hall (Camera Municipal). For residential property you will need a Habitation Licence (licença de habitçao), which confirms the town hall has inspected the property and that it complies with the planning permission and building regulations. Non-residential licences need to stipulate the appropriate commercial or industrial use.

OTHER ENQUIRIES:
There are other checks and enquiries, which are strongly recommended, and should be carried out, eg.
- Ask your lawyer or Chartered Surveyor to examine the local development plan to ensure that there are no infra-structural developments planned for the area.
- Ask a Chartered Surveyor to fully survey the property.
- If buying in a development check the regulations governing the development as well as any obligatory condominium charges.
This does all add to the expense, but it cannot be stressed enough that in making these enquiries you will fully understand all the obligations you are taking on in making this investment.This is not your home country and things must be checked carefully: provided this is done, you will have no problems in the future.

CONTRACT:
Have a Promissory Contract of purchase and sale drawn up (Contracto de Promessa de compra e venda) to be signed by you and seller. It should include:

* Identification of the parties.
* Identification of the property.
* Agreed terms and conditions of the contract.

You will normally have to pay the seller a deposit of 10% of the full purchase price at this stage. The contract can be signed in front of a Notary. It is legally binding on both the buyer and the seller. If the buyer defaults he forfeits the deposit. If the seller defaults he has to pay the buyer double the deposit (or, if a clause of specific execution is included, the vendor cannot withdraw and the purchaser can legally force the vendor to sell to him)
IMT (previously known as SISA):
This is the Portuguese Purchase Tax and will need to be paid prior to completion. The amount payable varies with the value of the property and your lawyer will always advise you of this figure before you incur any expenditure. Tax exemption applies to purchases below Euros 80.000 and a maximum of 6% applies to purchases above Euros 500.000. Between these amounts there is also sliding scale from 0% to 6%. The above mentioned figures only apply to residential villas or apartments. Different percentages are applicable on land or non-residential property and in those cases it is a fixed percentage, which does not vary with the price. Rustic Land is 5% and other non-residential purposes and urban land it is 6.5%

A very important exception has been introduced to the above figures in that whenever the purchasing entity is an Offshore territory resident / company, the Sisa Tax percentage will always be 15% regardless of the purchase price or the nature of the property.

NOTARIES & REGISTRATION FEES:
These will have to be paid by you on completion and as a rule will be approximately 2% of the value of the transaction.

OUTSTANDING ANNUAL PROPERTY TAXES (IMI):
Unpaid property taxes (IMI) attract fines, but may be allowed to mount up for some considerable time without official action; so ask the seller to show proof of payment for the last five years. Any outstanding property taxes should be settled before you make the final payment (your lawyer should do this for you).

FINAL DEED:
Proper title to the property comes with the final deed of conveyance (escritura) which is signed in the office of a public notary. All the relevant documents have to be checked before the final contract is read aloud and, unless the buyer understands Portuguese, interpreted in the buyers language.

REGISTRATION:
Finally, register the property in the name of the new owner at the local land registry. Do it without any delay. Registration itself can take several months but it is effective since the day it was applied for (your lawyer should do this for you).

AFTER COMPLETION:
If the registered owner of the property changes in the transaction, new contracts will have to be entered into with the utilities companies for electricity, telephone,etc. These involve personal attendance at the relevant provider's offices and are invariably extremely time consuming. Your Lawyer can attend to these transfers on your behalf for a reasonable charge. Payments can be effected in most cases by automatic bank transfer.

OFFSHORE:
This was a legitimate, convenient and common place way of acquiring property in Portugal. When a property owned by an Offshore Company is bought, it is the shares of the company rather than the property itself, which changes hands. By buying Offshore you avoid property transfer tax (IMT) and notary and registration costs. Inheritance tax avoidance was another plus. Although buying Offshore is quicker and it cuts out part of the normal baureaucratic procedure, one should still carry out all of the searches, checks and inspections mentioned previously.
HOWEVER in November 2003 the Portuguese Goverment, for the overhaul of all property taxes in Portugal, introduced new legislation. Included in this was a clause which obliges any Company registered in an Offshore base included in a "Black List" to pay 5% IMI per annum. With the new valuation process (see below) this could mean the annual taxes increasing to an unacceptable high level. There are a number of ways to alleviate this increase and advice should be sought from your Lawyer.

TAXABLE VALUE (VALOR PATRIMONIAL):
The vast majority of taxable values of properties are out of date. From the 1st of January 2004, the Local Tax Departments will be updating the values of all properties, obviously this will take a long time to carry out. However, any property which is sold after the 1st of January 2004 will be automatically revalued and the Portuguese Valuation Commissioners have advised that the new taxable values for both IMT and IMI purposes will be between 80% and 90% of the property's market value. Note: It is estimated that the annual tax applied in 2004 will be between 0.4 and 0.5% of the taxable value (but 5% for offshore - see above).

TAXATION:
If you intend to become a resident in Portugal, advice should be taken from a local accountant. If you do not intend to become resident, there are only two taxes that will concern you, Capital Gains TAX and TAX on the rental income should you decide to let your property out.Your lawyer and, if necessary, your accountant, can advise you of your future liability to any of these taxes. Note: If you are acquiring the shares of an offshore company, care should be taken as to any past Capital Gains Tax liability that the company has accrued (25% of gain).

WILLS:
It is always advisable to purchasers of property that they immediately make a Will in Portugal dealing with the assets in Portugal. If this is not done, probate in the country of residence has to be taken out then transferred and translated into Portuguese. Making a Will in Portugal will reduce the expense and avoid time delays. The Portuguese Will is in addition to and not in place of your existing Will. As from the 1st January 2004 inheritance tax will be zero-rated for residents leaving assets to immediate relatives. The rates for non-residents will be very low and set off against any double taxation agreements in place with the owner's home country.