Purchase Taxes and other expenses

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What expenses do I have as a buyer or new owner?

Now that you have found your new property in Tavira, the next step is to close the deal and sign the final deed. In this article you will found a short description of all taxes that you will have to pay when buying a property in Tavira or Algarve

Here are a quick resume of all expenses:

1- Promissory contract, P.O.A or Lawyer

If you decide to hire a lawyer or solicitor in order to elaborate a promissory contract, to give him power of attorney and to be your legal representative on the deal, check up all papers etc.., normally you will be charged approximately around 1% of the purchase price. This is average rate… you can pay more or less…

2- IMT and Stamp Tax;

The buyers are responsible for the payment of these 2 taxes when purchasing a property in Tavira or Portugal: The IMT and Stamp Tax.

The IMT is a tax paid before the final deed or same day. The amount to pay depends on the purchase price. The higher the purchase price of the property, the more you pay. For example, if you buy a property for 300.000€ you will pay around 15.000€ of IMT Tax. For a property sold for 250.000€ you will charged for 14.500€.

For a purchase of 500.000€ you pay around 25.000€… the higher the value the more you pay (average rate can be around 4% to 6% for a 2nd home deal or no resident..)

The Stamp Tax for any property for sale is very easy to calculate. The value of this tax is 0,8%. For example: A property for sold for 150.000€, you will pay 1.200€. Another example: property sold for 500.000€ pays 4.000€ (500.000€ * 0,8%).

3- Final deed and notary fees

This process is when the property will be registered in your name and you become the new owner. The final deed will be signed at the official Notary office or lawyer in the area close to the property and the Notary will charge you between 500€ /1000€ depending the value of the purchase. These charges cover all the paper work, registration the property for sale in your name in the land register, finance department and also the notary fees.

4- Loan or bank expenses

If you are thinking to get a loan or mortgage there will be more expenses to add on the process, like valuation, commission, etc… that will depend the LTV you ask and also the bank you hire. Each bank will have a diferent table for each service and stage. This you can check with a mortage brooker but it can be all beetween the 1.500€ to  2.000€

5- Condominium fees;

The condominium fee is a payment that will depend on the size of the property, services included, like pool, elevator, garden, etc…and you only pay once you are the new owner.

For example in Tavira if you buy an apartment without lift the value of the condominium to be paid monthly is average around 25€ to 50€. If the building with lift or pool the charges are can go 75€/100€ per month.

6- IMI (tax paid to town hall)

All properties pay this tax. In Tavira the value to pay is today around 0, 34% of the valuation of the property made by the finance department (AT).  You can find this valuation on a document called “Caderneta Predial”. So to have an idea of how much you will have to pay for an Algarve property for sale, just multiply the valuation (Valor Patrimonial) by 0,34%. Normally the valuation made by finance department is lower the purchase price.

Ex: VTP at 150.000€ you pay 510€ per year

These are the taxes that you pay when you buy or own a property in Tavira. Please be aware that these amounts can change. The best thing is always to confirm everything before sign and gert legal advice form a Lawyer in the area.

Other expenses:

  • Light, water and gas;
  • Internet and TV services
  • Small works like painting or decorating
  • etc…

I hope this article was useful and helped you to make and take a better decision when buying a property in Tavira. If you have any questions or if you need more details on this subject please contact me to my email or call me!

King regards

Artur Cruz

Disclamer: this is not a tax advice! Always review and confirm all details with Lawyer, Solicitor, Notary or other…

Author: Artur Cruz

I’m a real estate agent several times awarded in my career, “Centurion Producer”, “Hall of Fame”, real estate agent also awarded in Las Vegas, USA at one of the biggest and more important real estate conventions in the world. East Algarve “Top Producer” in real estate.

View all posts by Artur Cruz >

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