Portugal, bordered to the north and east by Spain and to the west and south by the Atlantic Ocean, is a full member of the EU. The country is mountainous north of the Tagus River, with plains to the south. Offshore its territories include Madeira, and the Azores.
Summers are hot and dry, winters are relatively wet with most rain falling in November and December.
Portugal has a diversified and increasingly service based economy which is now substantially privatised. Although Portugal is relatively poor by western European standards, economic growth has been above the EU average for much of the past decade although it fell back between 2001 and 2003. An OECD assessment reported that the economy emerged from recession in 2004, driven by exports and private domestic demand.
Real GDP growth is picked up and reached 2.75 per cent in 2006. Inflation remains low.
Like the economy, the property market saw a downturn in 2001 and 2002. But the Royal Institution of Chartered Surveyor's European Housing Review in 2005 reported that 'since 2003 the housing market seems to have been leading economy out of recession with rises in prices.
Portugal has a land registry system that records ownership of property and any encumbrances or charges.
As in Italy, property transactions usually entail a preliminary (promissory) contract stage at which the buyer pays a deposit. Completion has to be formalised before a notary. The notary will have checked that the documentation is in order and will provide a copy of the entry in his official books as proof of purchase.
It is at this stage that settlement of the purchase price, legal fees and transfer taxes will be required. Transfer taxes are based on the value of the property and have a starting threshold of about 56,000 pounds. Thereafter they range from 2 per cent to 8 per cent of value, the higher figure applying to properties valued in excess of about 350,000 pounds.
Estate agents fees are usually paid by the seller but this means estate agents, who are state licensed, work on behalf of the seller rather than the buyer.
It used to be that buying property through a company brought capital gains tax and inheritance tax benefits, but these rules are being changed and in some instances buying through offshore companies will in future be detrimental to investors' tax positions.
Income tax is also be levied on properties owned by non-Portuguese based on the value of the property whether or not it is rented out.
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Date Published :
Dec 5 2008