Portugal Property, An Investors Dream
Keywords: overseas, property, international, real estate, mortgages, advice, tax, foreign exchange, portugal
Many people from the UK have been attracted to Portugal by the year long pleasant climate, the affable Portuguese locals, and simplicity of taking a trip from the UK to Portugal. They have decided to make Portugal a home away from home, while some have even permanently settled in this country.
Revised planning regulations were introduced in 1993. Since that year, construction of new building has been minimized. This has led to an increase the price of the properties by as much as around 15 to 20 percent per year. But this has ensured that the new buildings are built in harmony with the surroundings.
The steeper price of land plots and the superior quality of the properties in Portugal has led to the property costs becoming higher than that in Spain. Nevertheless, older properties are still available in the interiors that can be obtained at a lower price and renovated to suit modern standards of living.
This guide aims at assisting you in deciding whether you want to make Portugal your second home
Synopsis of Popular Destinations
The settlers from the UK and Ireland have always preferred the Algarve for making purchases of their second homes in Portugal. This has resulted in intense demand and consequently the property prices in this region have escalated. Nowadays, considerable attention is being attracted by the northern areas like the Silver Coast and the Costa Verde, where tourism is still under-developed. Expansion in transportation and road and rail networks is being carried out.This guide gives brief descriptions of the areas most popular with the second home purchasers from the UK and Ireland.
The Algarve
The Algarve has been a long-standing favoured destination for holidaymakers from the UK and Ireland. Now it is one of the coveted locations for procuring a vacation house away from home.
Algarve is somewhat more expensive in terms of landed property. This is because of the unswerving sturdy demand that resulted in escalating property values. The demand is created due to the potential for consistent income from leasing due to its agreeable weather, and stringent regulations for planning that have made Algarve stand out from several other coastal areas of Spain. Nevertheless, there is something for every pocket, depending on location. The price or property in and around Lagos in the west and the suburban areas in the east are still reasonable in comparison with the inland areas. The ATT motorcade extends all along the Algarve shoreline, thus connecting the western coast of Algarve with the rest of the country. Predictable, capital appreciation in this region will be swift.
Silver Coast
Silver Coast is situated in central Portugal, between Porto and Lisbon. Marvellous architectural and religious structures, of immense historical significance, are housed at Silver Coast. The vast, virginal coastal area is dotted by isolated fishing villages. Farther inland, the rivers like Tagus waters the productive rural areas rich in livestock and a lush growth of agricultural crops. Even though the place is well connected with the rest of Portugal by the highway A1, the solitude remains unhampered.
The international real estate market has so far not extended up to the Silver Coast. As a result, property prices are still low compared to other areas of Portugal. Improved infrastructure should aid in drawing more buyers and result in prolific capital growth.
Costa Verde
Portugals Costa Verde is not the same as the Spanish province having the identical name. This region covers the districts of the Minho and the greater part of the Douro Litoral, stretching north from Portugals second largest city Porto to the Spanish frontier and some way north of Viana do Castelo.
This is a land of undulating mountain slopes and rich, productive valleys. Copious rainfall all year round ensures thriving agriculture in the valley and luscious green vegetation covers this part of Portugal. The National Park of Peneda-Geras, comprising of a diverse array of flora and fauna and offering a stunning panorama is situated on the
Costa Verde.
The lowest prices of property are available in this region, and the best bargains can be obtained in the inland areas rather than on the coastal zones.
Proceedings Involved in Buying a property
The purchase process
A verbal agreement between the vendor and the purchaser is followed by an examination of the title deeds and other documents by the solicitor of the person who will be buying the property. This is dome to ensure that all the legal documents including the caderneta urbana, which clearly delineates the propertys dimensions, borders and chargeable price, and the habitation license, which reveals its fulfillment of construction rules, are in order.
A Fiscal Number is then issued by the local tax office. An interim indenture is drawn between the buyer and the seller, which clearly mention the terms of the transaction. The buyer makes a deposit that usually amounts to 10 per cent of the purchase price.
After all the conditions detailed in the provisional agreement are fulfilled, both parties sign the final agreement in front of a Notary Public. At this point the outstanding sum is paid. The notary registers the deal with the Land Registry and records the caderneta urbana at the tax office.
Costs
In order to register your property with all the necessary government departments you will need to pay a number of charges. To account for such expenses, you need to set your budget in a manner that accommodates an advancement of 10 to 15 percent over the cost price of the property. These fees include:
Transfer tax or SISA (applicable for resale properties only). This varies according to the type and value of the property under consideration.
Value Added Tax (applied only on new constructions). This is typically 17 percent.
Notarys fees. This usually is set at around 153euro
Legal charges. This amounts to 1 or 2 percent.
Deed registration fee. This is normally 0.75-1 percent.
Declared Values
The vendors in the past, in order to reduce the capital gains tax and other charges levied in the event of a property sale, used to under-declare the actual price of a resale property. Even now some private sellers may insist on this practice. Do keep in mind that this in an illegal practice liable to rigid penalties. Even if you are able to avoid the watchful eyes of the authorities on the matter of under-declaration at the time of buying the property, it is very likely that you will be adversely affected by the difference in capital gains when you decide to sell your property.
Financial Arrangements through Mortgages
Remortgaging the UK properties is an attractive option available to consumers in need of finances for making a purchase at Portugal. A mortgage on the Portuguese property can also be arranged. However, remortgaging is favorable because releasing equity on the UK property enables the purchaser to make the payment in cash and to avert a second mortgage. Of course this benefit can be utilized only by the persons who are the outright owners of their first home in the UK.
Finances for purchase and home improvements can be attained through Portuguese lenders. UK credit suppliers will loan funds equal to 80 per cent of the cost of purchase for the second home purchase over tenure of 15years. Portuguese providers will lend the identical sum over a 5 to 25 year loan period.
Euro mortgages
The European Central Bank (ECB) set the rate of the Euro mortgages to a value that is at present lesser than the Bank of England base rate. Thus this offers a lucrative alternative. However, the currency markets are volatile. Any unforeseen alteration in the currency market may adversely affect people borrowing money via euro mortgage. The lower base rate of ECB as compared to that of the Bank of England does not warrant savings on reimbursements for persons opting for a euro mortgage. The competitive UK mortgage market provides several advantageous deals on sterling loans. Hence it is advisable to carry out a market research before applying for a loan.
Taxation
The tax system in Portugal resembles the system that is practised by all EU countries. A pact for double taxation has been made between the two nations, Portugal and the UK.
Personal Taxation as applied to Non-residents
Persons who are not residents of Portugal need to pay taxes only on income earned at that country, for instance, interest paid on deposits or savings in Portuguese banks. VAT, tax for capital gains and wealth tax may also be levied.
A yearly income tax return must be filed if the generate earnings from renting out their property. Such income is levied at a flat rate of 25 per cent. Only the expenses on repairs and maintenance can be deducted from tax, no subtraction on mortgage interest against rents is endorsed.
Personal taxation as applied to residents
People who are permanent residents of Portugal are put through taxation on global income, bequests and capital gains. A person belonging to a foreign nationality residing at Portugal for a period extending beyond 183 days all through a tax year, starting from 1st January and ending on 1st December, is regarded as a resident. They need not stay for 183 consecutive days to come under taxation.
Other taxes that are imposed on residents of Portugal include VAT, stamp tax, vehicle sales tax, taxes on real estate deals and tax on rentals.
The Local Taxes that are to be Paid
Contribuicao autarquica is a municipal property tax that is collected every twelve months as per the registered value of a property and the existing local services. This amounts to 0.8 percent for properties in rural areas and for properties in urban areas this ranges from 1.1 to 1.3 percent.
Tax on Legacies and Bequests
On condition that all apposite certifications are presented, any tax on inheritance (referred to as Stamp Tax in Portugal) need not be paid when a property is bequeathed to a close family member. Hence, you should make a detailed will after you buy a property in Portugal.
It is advisable that you engage someone who specializes in the international system of taxation to go through all the technicalities and take care that while you cover your liabilities satisfactorily, you do not end up paying more than what is required.
Fiscal Aspects
The official currency of Portugal is the euro. The current exchange rate is 1 EUR = 0.673749 GBP UK Pounds.
Foreign money in cash or travellers cheques can be freely imported but you should notify the customs department if the imported currency is more than 12000 euros.
Banks, ATMs and bureaux de exchange are in plenty in all major towns and tourist resorts. Usual hours of banking are 8:30 a.m. to 3:00 p.m., from Monday to Friday.
All major credit cards and travellers cheques are commonly accepted. It is prudent to carry the cheques in euros, American dollars or pounds sterling to evade additional charges on exchange rates.
Laws related to Passports, Visas and Residence Permits
Passports and Visas
All EU citizens mush possess a valid national identity card or passport in order to enter Portugal. It should stay valid for the period of their stay and a visit for up to 90 days is permitted. A visa is not necessary.
Residence Permit
British nationals being EU citizens do not require residence permits to live in Portugal. However, while applying for driving license, or for filing taxes, such permits may prove useful as legal residence proofs.
Inhabitation for a period of 90 days to 1 year will be covered by a short-term residence permit. A long term permit will remain valid for up to five years and following that tenure can be automatically revalidated. At the end of that period renewal can be obtained by applying in person.
The Economy of Portugal
Almost 23 billion euros of EU funds have been allocated to Portugal that has helped Portugal to enjoy one of the EUs most rapidly developing economies for quite some time. The funds have been utilized to improve the transportation services, promoting tourism and upgrading the real estate market.
Important sectors of economy have been liberalised by the privatisation of several government controlled organizations. The economy has become service based, nearly three quarters of Portugals GDP is being provided by the service sector. Almost 6 percent is contributed by agriculture, while the rest is supplied by trade and commerce. The principal export items include machinery and tools, garments, footwear, cork and wood, equipments for mining, and wine.
UK being one of Portugals chief overseas investors, relationship between the two nations is friendly and warm.
Leo Fogarty is Managing Director of overseas property portals www.Overseas-Property.ie and .co.uk . He is also a regular author for property magazines, most notably Property Gallery Magazine in Ireland and is the founder of real estate article directory, PropertyArticles.org
Previous Articles Highlighter:
How To Make Cash Using A Good Forex Trading System (1)
Approach the forex trading market as you would any business. Create a business structure to keep your trading endeavors consistent. There are a lot of resources available to aid you in doing this, all you have to do is look for them online.
How Contract Hire Can Save Your Company Money (2)
Additional benefits of Contract Hire include; minimal capital expenditure (you do not have to pay for the vehicle) reduced administration (administration is minimal) and no disposal worries (when the agreement ends the vehicle remains the property of the lessor and never becomes property of the lesee).
An Introduction To Forex Trading (3)
Market liquidity is also a factor. There will always be sellers and buyers to conduct transactions with. This liquidity, which comes from banks that provide liquidity from investors, institutions and other market players, also helps in ensuring the stability of prices.
Britain's Financial Position Has Strengthened 'Substantially' (4)
This is a growth of some 127 per cent from the 2,795 billion pounds recorded at the end of 1996. Overall, the total value of household assets increased by 4,343 billion pounds during the ten-year period to 7,627 billion pounds.
How Umbrella Insurance Can Save Your Life (5)
Also, some umbrella policies provide coverage for you if you are sued in connection with any charitable boards or organizations of which you are a member. You may have to contact your insurance company and pay an extra premium for this type of coverage.
What Is Foreclosure And How Can I Avoid It? (6)
Department of Housing and Urban Development (HUD) offers free or very low cost housing counseling nationwide. These counselors can assist you to better understand the law and your options.
Shopping Money Saving Tips (7)
However, the tendency is, you are vulnerable to temptation of 'too much spending. Sometimes, we are getting products from store without partially knowing the amount it could reach. And because we have a credit and debit cards with us, we are tempted to let the shopping ( with some stuffs that are not that essential) happen.
Is The Florida Real Estate Market Over? (8)
(This should also positively impact the ability of a person to obtain a better sales price on a property should they decide to sell.) In addition, the Governor and other governmental leaders in Florida are working to develop a meaningful program of providing homeowners insurance relief.
How To Pick The Right Auto Loan (9)
Home Equity Loans and Home Equity Lines of Credit If you own a home and have accumulated substantial equity on your property, then you may consider getting a home equity loan or a home equity line of credit.
How Do I Shop For The Best Mortgage Rates? (10)
It is a sad state but there are many predatory lenders out there who are eager to cheat you and one way they do that is by tacking on fees and service charges.
It's Back To The Future For Real Estate (11)
What caused the break? Foreclosures. Investors soon realized that mortgage backed securities contained more risk than expected, and stopped buying them. Suddenly, lenders did not have this new market for selling many of their loans.
Brits 'Not Thinking Enough' About Finances (12)
It's crucial that we plan for our old age and that our investments are diversified amongst a number of different asset classes - not just property." The information officer reported that the marked house price growth seen in recent years is unlikely to continue, with homeowners also set to face increased borrowing costs which may in turn impact upon their ability to manage other areas of their spending such as secured loans.
Home Staging: Curb Appeal Is What Invites Prospective Buyers Into Your House (13)
Be honest with yourself. We get used to what we see everyday and start not to notice some of the things that might not be very attractive. Make sure the lawn is mowed and well trimmed.
Car Insurance Costs 'Set To Rise Further' (14)
However, a year later the typical policy now amounts to some 519 pounds - with such an increase potentially squeezing drivers' abilities to meet other monetary demands attached to their vehicle such as MOT, tax and fuel, not to mention areas such as credit cards and personal loans.
Credit Report - The Fast And Legal Way To Fix Yours (15)
As soon as the investigation is complete and it has been found untrue it will then land back on your report. This request for an investigation will also stay on your report which wont help your future loan application.
Discussing Basics Of Forex Markets (16)
Keywords: currency, forex, forex market, forex markets Discussing the basic of foreign exchange or forex markets gives you an essential idea on how to handle mazes found in the particular market.
Bad Credit Student Loan - A Real Trap? (17)
- Most consolidation companies require a minimum loan amount, $10,000 is typical. The difference between federal and private loans Federal loans have advantages over private loans. For example, interest on the loan is tax deductible, the loan can sometimes be forgiven for certain types of service, and you can sometimes defer payments on the federal loan if you go back to school.
How Does Forex Software Work? (18)
Web based forex software A web based foreign exchange trading system allows you to trade anytime and anywhere, provided you have an internet connection. This software application will allow you to log in and trade through the use of any available web client such as Firefox or Internet Explorer.
The New Home Builders In Houston Create Functional Art (19)
And who wouldn't be? After all, the new home builders in Houston have managed to deliver some out of this world design features that can leave one breathless, or at least speechless.
How Did I Lose Money On My Bond Investments? (20)
If you are buying a corporate bond, however, there is always a chance that the issuer could go out of business. In the event of liquidation, bondholders are given priority over stockholders.
Newer Articles Highlighter:
Consumers Set To Face Financial 'Shock' (1)
"People applying for mortgages will also need to be much more accurate about the information they give. For example, a county court judgement that in the past was not considered crucial, could now mean the difference of being reclassified as sub-prime when they come to remortgage.
Bankruptcy Credit Report - Know The Facts (2)
This Trustee can liquidate or even sell valuables that you own to pay your creditors. The Chapter 13 bankruptcy is when debt is consolidated into a single monthly payment.
Tampa Real Estate Agents - Saves First Time Buyer's Money & Time (3)
If you do not have a plan, you will face the prospect of getting off course in the search of a home that will best suit your needs. Perhaps the most significant element of a plan is to set forth specifically what you are willing to pay for a home.
Mr. Greenspan's Investments (4)
Hard assets, such as real estate, also increase in value due to inflation. You can lose money if you own a home or building in a declining area (Detroit comes to mind) but overall real estate investors will fare well under Mr.
Can I Get A SBA Loan To Help My Business (5)
Fourth, you need to include information about why you are requesting the loan, how much you need the loan to be for, proposed repayment information and information on what will be used as collateral for the loan.
Trading The Forex Market For Newbies: Currency Trading For Beginners (6)
The author Sam Beatson learned to trade forex from 3 highly successful interbank market traders. He now publishes information on his forex blog and via his ezine as well as paid courses.
Forex Trading Software - What You Absolutely Must Know... (7)
Speed of execution obviously is a major advantage for intraday trading. The other type of forex trading software that has been popular to the retail investor, is the forex software that claims to identify signals and entry points for trades usually for a monthly fee.
Investment Property Software Boosts Your Profits (8)
Going blindly into the commercial property market is not the way to turn a profit. Working smarter uses your time and money to your advantage. Using investment property software can help make life easy.
How Does Forex Trading Software Help Traders? (9)
The other type of forex trading software is the client side or client-based. You will need to download this application and install it onto your computer. Both types of forex trading program are very popular among traders as both allow forex traders to conduct transactions at any time of day from anywhere in the world.
Mortgage Arrears: How To Save Your Home From Foreclosure (10)
There are still some ways that you could save your home from foreclose. Being in contact with your bank and working with them to help you out, is the best thing to start with.
Car Insurance Costs 'May Rise' (11)
Overall, the financial services firm also reported that financing a car purchase is the second most popular reason for consumers to apply for a personal loan. Abbi Rouse writes for AllAboutLoans.co.uk, an online loans comparison site, visit us today for information on all loan topics including secured loans UK applications and home loans from all leading UK providers.
Many People Are 'Financially Complacent' (12)
He pointed out that a number of people are leaning towards other methods of saving for the future, for instance relying on the amount of equity built up in their property as a means of funding their retirement.
New Parents 'Look To Loans To Help Reduce Financial Pressures' (13)
But financially a new baby can cause havoc because of the combined burden of extra costs and reduced income. If money is already tight, it's no wonder that so many families have had to turn to borrowing to make ends meet." He added that as households are set to face increased costs, taking out a loan or another form of credit is often "a sensible way to tide you over".
The Dangers Of Incurring Debt To Finance A Lifestyle (14)
Debt keeps you from building up a personal savings. Chances are, if you're using credit to pay for your lifestyle, you aren't saving any money. What's going to happen in the case of an emergency, if you suddenly find yourself unemployed?
Free Credit Report - Stop! You Need To Know This (15)
They will normally create a monthly plan and budget to get you out of debt. They will look at how much money you're spending and income you have coming in - then they will attack both areas to optimize you financial situation.
Where To Find Investment Articles (16)
You might want to stream video presentations or look at the "lists" section where you can find the 100 best mid-cap stocks or an international investment guide. The "personal finance" tab is an invaluable resource for anyone looking for investment articles.
National Assoc Of Realtors Report - Tampa Real Estate Market (17)
Therefore, a person considering buying a home may want to do so since home prices are as low as they have been in years. Lance Mohr is your Tampa real estate expert, with over ten years of experience in real estate sales and has been investing in real estate for over 18 yrs.
How To Dispute A Credit Report (18)
State this all in an easy to read list in order to masmize your chances of a postive result. Once you have written to the relevant consumer reporting company they will investigate each claim you have made and make adjustments to your credit report.
Federal Credit Report - FAQ's (19)
Debt Collectors cannot identify themselves to you at all, while on the phone. Who Has The Right To View My Federal Credit Report? If someone has a legitimate business need then they can get access to your Report, including your Credit Score.
University Students Face 'Tight' Financial Situation (20)
For the one in five students (19 per cent) who are hoping to rely on their parents' policy for protection, we would also advise that they double-check this as they may not actually be covered." The most popular item to be found in a student's room is a computer, with 95 per cent of students owning such an object.