How to Sell Your Property in Portugal

Dealing with the sale and purchase of a property can be daunting, especially when there is a considerable language barrier. However, once you understand the terms and procedures explained below, you'll realize that, fortunately, things aren't as complicated as they seem.

• Settlement of Fees and Accounts 

Before finding a potential buyer or accepting an offer to sell, the seller must ensure that all council fees and taxes are in order, as well as maintenance expenses and condominium fees are in good standing and up-to-date.

• Payment of Utility Bills

It is crucial that all utility bills, such as electricity, water, gas, phone, internet, and insurance, are paid in full before the sale. Outstanding or overdue bills, particularly taxes, can result in the seizure of the property by government authorities.

• Transfer or Cancellation of Utilities 

Some sellers choose to cancel the utilities after they have settled all the bills, while others prefer to transfer the services directly to the new owner's name, which usually occurs when both parties are legally represented by lawyers or solicitors, thus avoiding the inconvenience of restarting the process of registering the services.

• Certified Real Estate Agency Recommendation

It is highly recommended that both sellers and buyers use the services of a Portuguese State certified real estate agency. This provides protection and security against irregularities or conflicts that may arise during the transaction process. The Government grants the license to real estate agencies after verifying compliance with diplomas, certificates, and forms approved by the Government in all their operations.

• Energy Certificate 

According to Law No. 78/2006, published on April 4, 2006, all property owners must have an energy certificate ready for presentation at the time of signing the deed. This certificate evaluates the energy efficiency of the property and is required for the completion of the public deed. Energy certificates are issued by certified companies and engineers, with completion in about 5 days.  The cost varies depending on the type and size of the property, usually costing a little over €200 for a medium-sized two-bedroom apartment.

It is the seller's responsibility to obtain and pay for the certificate, which is valid for 10 years and will be given to the new owner at the time of the deed. Sellers can ask their legal representative to take care of the certificate, and many real estate agencies also offer assistance in obtaining it.

• Use of a Legal Representative

It is recommended to use a legal representative, especially when the seller does not reside in the country. Essential tasks, such as drafting the promissory contract of purchase and sale, checking all documentation related to the property and consulting the tax administration to confirm the existence of taxes, as well as scheduling the deed, are the responsibility of the attorney-in-fact, relieving the buyer of future worries.

• Three Main Steps of Selling Property:

- Signing of the promissory purchase agreement; - Signing of the deed of transfer of ownership; - Payment of any capital gains taxes due.

• Promissory Contract of Purchase and Sale 

This is a legally binding document that sets out all the terms and conditions of the sale. It is drafted by a lawyer and subsequently signed by all parties involved, either by the sellers and buyers, through their legal representatives, or in person.

The buyer pays the seller or their legal representative a deposit, usually ranging from 10% to 30%, depending on the previously established agreement between both parties. This contract serves to confirm the intention to buy and sell the property and stipulates that if the seller withdraws from the deal, he must return the deposit to the buyer, doubled. If the buyer withdraws, they will forfeit the deposit amount.

• Transfer of the Deed 

A deed transfer is a final contract that is signed during the sale or purchase of a property. Generally, it is up to the buyer or their attorney to schedule a date and time for the signing of the deed, as agreed upon by all parties involved. This takes place at a notary's office after all parties, or their legal representatives, have confirmed that all the terms and conditions set out in the promissory contract have been fulfilled.

At this stage, the buyer pays the seller the remaining amounts required, completing the sale. If there is any party who does not speak the language, a translator must be present. After the remaining amounts have been paid to the seller, all the keys are handed over to the new owner, who will bear the costs of the deed and related taxes.

• Capital Gains Tax 

Capital gains tax is owed by the seller to the government when the property is sold for more than the original purchase price. The seller may be exempt from this tax if they reinvest the money within a period of time and under certain conditions.

It is highly recommended that the seller consult with a lawyer or a tax advisor about this tax, as the calculations involve several factors and must be performed by qualified professionals. Even if there is no tax to pay, it is always mandatory to declare the sale of the property to the Tax Administration.

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