Buying or Selling a House: Know the Fees, Taxes, and Necessary Documents?
When considering the purchase or sale of a house, it’s essential to understand the financial and legal implications involved. In this article, we explore the fees, taxes, and documents associated with these real estate transactions. After all, making informed decisions is crucial to ensuring a smooth and successful experience.
Why is it important to know this information?
Before delving into the details, let’s reflect on the relevance of this knowledge. By understanding the fees, taxes, and documents, you’ll be prepared to:
Avoid financial surprises – Knowing the costs associated with buying or selling a house allows for proper planning and avoids unpleasant surprises like unexpected fees.
Comply with legal obligations – Legislation varies by country and region. Knowing which documents are required and which taxes must be paid is essential to avoid future problems.
Negotiate with confidence – When informed about the fees and taxes involved, you can negotiate more confidently and make better decisions. Clarity in this aspect strengthens your position, both as a buyer and a seller.
Fees, taxes, and documents in buying
Here are the main points to consider when buying a house:
Property Transfer Tax (IMT)
The amount of this tax varies depending on the type of property (urban or rustic), its location (municipality, mainland, or islands), and its intended use (permanent residence or secondary residence/investment).
Stamp Duty
The calculation of this tax, one of Portugal’s oldest, is one of the simplest to make. The amount to be paid corresponds to 0.8% of the deed value.
Municipal Property Tax (IMI)
Although it does not need to be paid at the time of purchase, this is an annual tax linked to the property, and it’s important to be aware of it. As a new owner, you’ll receive notification to pay this tax in the year following the purchase of the property. To calculate the value of this tax, you must multiply the rate established by the municipality where the property is located by its Tax Asset Value (VPT), a value recorded in the Property Notebook. In addition to these taxes, there are several documents you should consult, requesting them from the seller, to obtain as much information as possible about the property.
Property Notebook
The property notebook is essential in the transaction of a property, as its data are used in the celebration of a promissory contract of purchase and sale (CPCV) and in the deed. It is also a document required when applying for a housing loan or subscribing to housing-related insurance.
Occupation License
Requested at the City Hall, this license serves to prove the conformity of the completed work with the approved project and that a certain property has been previously inspected and complies with the regulations that establish the permitted uses.
Energy Certification
This certificate is mandatory and informs about the energy efficiency of the property. Also, keep in mind that you will have additional expenses for the CPCV and the deed.
Promissory Contract of Purchase and Sale (CPCV)
It is always advisable to have a lawyer or a solicitor to check the draft of the CPCV and the property documentation before signing. This review of the draft can cost between €40 and €60, and the acknowledgment of signatures can add €15 per signature. This contract is a preliminary commitment before the definitive deed.
Deed
The value of the deed varies (€400 to €900) and depends on the fees of the professional who performs it. It is at this moment that the property is officially transferred.
Fees, taxes, and documents in selling
In the sale, there are also some important points to consider:
Capital Gains
If the sale generates a profit (capital gains), IRS is applied to 50% of that value. There are exemptions if you reinvest the money in another property or if the house was acquired before 1989, the date corresponding to the entry into force of the IRS Code, approved by Decree-Law No. 442-A/88, of November 30. In the case of inheriting one or more properties, consult a professional, as there may be several variables at play and capital gains may be calculated based on the property’s VPT. Capital gains must be reported to the tax authority within 36 months of the sale. Failure to declare may result in penalties.
Real Estate Agencies
Although some agencies cover part of the expenses, it’s important to be aware of the fees associated with real estate mediation. These fees vary but are generally calculated based on the sale value. Regarding documents to perform the sale, some of which we have already discussed, the following stand out:
Permanent Property Certificate
This document, obtained from the Land Registry, confirms the legal status of the property and costs between €15 and €20, depending on whether it is in person or online, and has a validity of 6 months. Initially, you may opt for simplified property information. It is a crucial step to ensure that there are no encumbrances or pending mortgages on the property.
Occupation License
Requested at the City Hall, this license certifies that the property complies with the habitability standards. The cost varies, but it usually starts at €35. Without this license, the sale may face obstacles.
Energy Certification
To sell or rent, it is necessary to obtain an energy certificate. The registration fee can vary more or less between €30 and €200.
Housing Technical Datasheet
Essential to prove the technical characteristics of the property. The cost is between €100 and €200. It includes information such as useful area, construction materials, and space layout.
In addition to the points presented, there are many other details to consider during the process of buying or selling a property. Consider working with a real estate consultant, as they have the appropriate knowledge to guide you through the entire process of buying or selling your property.
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