Tax on villa purchase

Share experience regarding ownership of property and/or living in Portugal.
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Philip Baker
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Tax on villa purchase

Post by Philip Baker »

Hi all About 8 years ago I connected with the forum as I was trying join you in Carvoeiro. things happened but now I am starting all over again. Question 1 am I right in thinking if I purchase a villa for £400,000 I will pay 8% tax ie. £32,000?
2. Do I need a visa to stay in Portugal more than 3 months?
WEK
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Re: Tax on villa purchase

Post by WEK »

If you have an EU passport you can stay as long as you like. If you don't have one you need a visa to stay longer than 3 months.
SatRoger
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Re: Tax on villa purchase

Post by SatRoger »

Philip Baker wrote:Hi all About 8 years ago I connected with the forum as I was trying join you in Carvoeiro. things happened but now I am starting all over again. Question 1 am I right in thinking if I purchase a villa for £400,000 I will pay 8% tax ie. £32,000?
2. Do I need a visa to stay in Portugal more than 3 months?
The tax will calculate on the price in Euros. If the selling price is between 287.213€ and 550.836€ the rate is 8% minus 11.035,25€
Let say you buy for 500.000€, the tax is (500.000x8%) - 11.035,25 = 28.964,75€
Anything over 550.836€ is a flat rate of 6%, no discount.
But you also have to pay Imposto de Selo (IS) 0,8% = 4.000€ and the Deed signing fees, which is usually less than 1.000€ total (if you use casapronta.pt the fee is 350€ to 700€, depending if you are using a bank loan or not)
njc0607
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Re: Tax on villa purchase

Post by njc0607 »

yes, the tax on purchasing is a killer... you should budget for around 9% of the purchase price, for tax and fees.

be careful when purchasing the property with its contents, as this should not be part of the taxable amount of the property and can be discounted off the purchase price... or at least that's how it used to work...
shanagarry
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Re: Tax on villa purchase

Post by shanagarry »

WEK wrote:If you have an EU passport you can stay as long as you like. If you don't have one you need a visa to stay longer than 3 months.
If, as is being reported in this weekend's UK press, Britain exits the EU and the single market - will all British expats require visas - regardless of the time spent in Portugal or anywhere else in the EU?
shanagarry
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Re: Tax on villa purchase

Post by shanagarry »

[quote="njc0607"]yes, the tax on purchasing is a killer... you should budget for around 9% of the purchase price, for tax and fees.

We gave considerable thought to coming back - but calculated the cost of property ownership in Portugal or Spain would more than cover several holidays in equally appealing places - without the 'hassle' and the cost. With the experience of 3 Carvoeiro ownerships over a 25 year period to base our numbers on - we decided against buying again. The taxes were the deciding factor - but as most know it doesn't stop there....

We miss Carvoeiro - it is a truly delightful town.
sunman
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Re: Tax on villa purchase

Post by sunman »

not always a popular subject so I'll put my tin hat on; but you could look at buying a property owned by an offshore company; you buy the company rather than the property so title of ownership doesn't change & there's no purchase tax to pay,

by the time you've paid agents fees & purchase tax a sale can eat upwards of 15% of the property value, ridiculous. I doubt you'll find many transactions East of Villamoura going on that aren't transacted offshore.

oh, and before the rocks come flying I'll add that it's all perfectly legal and as long as the offshore company is domiciled in an approved territory the annual property taxes are exactly the same as domestic held residence.

sunman exits stage left 8)
widge
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Re: Tax on villa purchase

Post by widge »

Remove the tin hat sunman and add the post script


Bear in mind that the laws regarding the ownership of Portuguese property through offshore companies are currently in a state of change and all advantages may be annulled or further reduced in the future.
sunman
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Re: Tax on villa purchase

Post by sunman »

widge wrote:Remove the tin hat sunman and add the post script


Bear in mind that the laws regarding the ownership of Portuguese property through offshore companies are currently in a state of change and all advantages may be annulled or further reduced in the future.
reminds me a bit of your gloomy prognosis for this lovely forum, but we're still here 8)
widge
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Re: Tax on villa purchase

Post by widge »

My lugubrious nature sunman. :( We're still here on this forum but I can think of many who aren't, incidentally you can keep contact with most of them on FB Carvoeiro forum.
sunman
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Re: Tax on villa purchase

Post by sunman »

widge wrote:My lugubrious nature sunman. :( We're still here on this forum but I can think of many who aren't, incidentally you can keep contact with most of them on FB Carvoeiro forum.
& I'm glad you're still here matey :) , for various reasons we're not coming to the beautiful ex fisherman's hamlet very much at the moment, but let's have a beer when we do.
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