With the vagueness around the future of the “golden” tax system, many foreign buyers are rushing to acquire a property in Portugal. Sometimes forgetting some basic rules. Advice from a lawyer.

Portugal, whose real estate market is in the spotlight at a trade show taking place this weekend in Paris, has what it takes to attract foreign buyers, especially the French. An idyllic setting, cheap property prices and above all a “golden” tax system. So “golden” that the tax authorities are watching. Some even wonder if it will last. For households already settled, no fear: they will continue to benefit from it for ten years, as provided for in the Franco-Portuguese tax treaty. For the others, however, time is running out. Suddenly, requests for acquisitions are pouring in. But Portugal may be an El Dorado, but buying real estate with your eyes closed is not highly recommended. Several precautions must be taken before launching.

Portugal, mistakes to avoid before buying a home

Check the conformity of the house

To meet the high demand, construction is increasing in Portugal. And for fear of no longer being able to benefit from the advantageous tax system, some foreign buyers sometimes rush a little too much. “They are wrong to believe that the tax system will be called into question, assures Me Sandrine Bisson Marvão, French-Portuguese lawyer specializing in real estate law. The time required to obtain building permits is long and certificates of compliance are often issued very late. With austerity, some town halls have not increased their staff and lack staff to check the conformity of constructions. The Algarve region, which is very popular with the French, has decided to remedy this by increasing its staff. “

Portugal, mistakes to avoid before buying a home

Is the accommodation rentable on Airbnb?

You plan to rent your accommodation in Portugal on Airbnb. Note that, for this, you must register it in the National Register of seasonal rentals as a tourist rental establishment (“local alojamento”) and then wait for the authorization of the town hall, as stipulated by a decree of April 23, 2015. Note that if you modify information concerning your accommodation, you must notify the town hall within ten days. “For six months, some town halls like those in Lisbon, block new licenses on certain districts – most popular – (Alfama Mouraria, Castelo, Bairro Alto, Madragoa in Lisbon) to prevent cities from being taken by storm by tourists. This will soon be the case in Porto ”, explains Me Sandrine Bisson Marvão. Before renting out your accommodation, check with the town hall to find out if the area where you live is on the “black list”.

Portugal, mistakes to avoid before buying a home

Thorny inheritance tax

Are you planning to acquire accommodation in Portugal that you later intend for your children? Be aware that they will be exempt from inheritance tax. But do not rejoice too quickly because the tax legislator has not necessarily simplified the task for them. To benefit from this exemption, a condition must be fulfilled: the heir must reside in Portugal. What if the heir is a French resident? “If the buyer dies within seven years of the acquisition and his heirs have been French residents for six years over the past ten years, they will be taxed according to French law”, underlines Me Sandrine Bisson Marvão who advises people concerned to contact a French notary but also a Portuguese notary in order to find out about local inheritance rules.

Portugal, mistakes to avoid before buying a home

Beware of double taxation

Take the case of French people who want to buy housing in Portugal to invest. Many do this with a non-resident tax number. As soon as the notarial deed is signed, they declare the address of the property to the tax office. “It is a mistake because they are considered to be resident in both countries for tax purposes and could be doubly taxed in France and Portugal”, warns Me Sandrine Bisson Marvão who underlines that it is necessary to wait “between a month and a year” before ability to correct. Before considering buying a property in Portugal, the lawyer advises to inquire about its tax status (resident or non-resident) to know if you are subject to local taxation, French or both.

Source : ACTUALITÉ – from Guillaume ERRARD – Posted on 5/19/19 7:00 AM