Property in Spain or Portugal
Discussion
FunkyNige said:
JulianPH said:
As an aside, cars are also very expensive in Portugal when compared to the UK, due to the very high tax place on them when new wish filters down into the second hand market.
My in-laws have a place in Spain and bought a second hand left hand drive car in the UK then drove it down to Spain (and registered it there) as they found the cars there so expensive.There is still a cost saving, but we decided the hassle was just not worth it in Portugal.
It is interesting that over here I like my Aston Martin, Bentley and Range Rover, but over there I feel more comfortable driving a scuffed old hatchback!
Thanks all, that's helpful.
I certainly don't plan to rush-in or impulse buy, but I'm not sure I want to build really.
Do you plan to build this place as quickly as the pool project ... !
dingg said:
I'm out there at the minute in rented accommodation,looking for something in your price range, don't believe ANY of the agents, basically they're all crap.
Good luck! Will you share how you get on? I certainly don't plan to rush-in or impulse buy, but I'm not sure I want to build really.
JulianPH said:
Buying there is not cheap though. You would be wise to budget another 10% of the total purchase cost for fees and taxes.
... Electricity and gas is very expensive and you get through a lot of it!
... You need a good solicitor and to ensure the habitation licence is all in order.
... I'm currently looking for a plot for a new build!
I'd already got a feel for buying and running costs, and absolutely echo the point about legal advice. ... Electricity and gas is very expensive and you get through a lot of it!
... You need a good solicitor and to ensure the habitation licence is all in order.
... I'm currently looking for a plot for a new build!
Do you plan to build this place as quickly as the pool project ... !
My wife and I bought a villa with a pool here in Portugal 3 years ago, an unfinished Bank repo that was basically just a 1st fix shell. I completed it using local chaps over 2 years and got the Habitation License only recently.
It isn't our dream home. But it is nice enough and a nice stepping stone into the Algarve (Central, near Carvoeiro). We are now looking for a plot to build our 'dream home' on. Look at between 1200 and 2000 euros per sq.m. In the current market, building isn't necessarily cheaper though, it is odd at the moment. Prices are all over the place. Higher than they have been in awhile but also unrealistically in some cases. Contractors have jumped on the bandwagon and are charging more than they ever have. So worth shopping around and doing a lot of research.
I dealt with the Lagoa Municipality and had no major admin issues with my Habitation License, Planning, Electrics, Water etc. All reasonably straight forward.
You need to take on a Technical Surveyor to provide the sign-offs with the local authority - sort of like the NHBC but without the Warranty, just Building Control.
I'm living here full time - they really want you to move here and invest, so will give you a 5 year residency permit immediately and then 3 months before it expires you head off to Faro or Portimao and make it permanent.
Yep, cars are much more expensive here, I went from a 911 to a Mini Countryman! Ok, it is my wife's car really and I haven't bought myself one yet, given she spends half the month in Amsterdam where she still works and I do all the driving locally. As JulianPH suggests though, you don't need anything too fancy here, most cars are old and the standard of driving here generally poor. I am hesitant to buy a really nice car, I drive on trails, it gets dusty every day.
Life here is...wonderful. I highly recommend it, the outdoors lifestyle is immense, plenty of Sunshine, good food and the Portuguese are a great, friendly people.
It isn't our dream home. But it is nice enough and a nice stepping stone into the Algarve (Central, near Carvoeiro). We are now looking for a plot to build our 'dream home' on. Look at between 1200 and 2000 euros per sq.m. In the current market, building isn't necessarily cheaper though, it is odd at the moment. Prices are all over the place. Higher than they have been in awhile but also unrealistically in some cases. Contractors have jumped on the bandwagon and are charging more than they ever have. So worth shopping around and doing a lot of research.
I dealt with the Lagoa Municipality and had no major admin issues with my Habitation License, Planning, Electrics, Water etc. All reasonably straight forward.
You need to take on a Technical Surveyor to provide the sign-offs with the local authority - sort of like the NHBC but without the Warranty, just Building Control.
I'm living here full time - they really want you to move here and invest, so will give you a 5 year residency permit immediately and then 3 months before it expires you head off to Faro or Portimao and make it permanent.
Yep, cars are much more expensive here, I went from a 911 to a Mini Countryman! Ok, it is my wife's car really and I haven't bought myself one yet, given she spends half the month in Amsterdam where she still works and I do all the driving locally. As JulianPH suggests though, you don't need anything too fancy here, most cars are old and the standard of driving here generally poor. I am hesitant to buy a really nice car, I drive on trails, it gets dusty every day.
Life here is...wonderful. I highly recommend it, the outdoors lifestyle is immense, plenty of Sunshine, good food and the Portuguese are a great, friendly people.
We bought in Lagos, western algarve, last year. Do it!
I note in 2015 on this very thread I thought it was a crazy idea. Whoops.
Ours is a second home, with a nice warm retirement plan in mind in ten years or so.
I used https://britishexpats.com/forum/portugal-89/ a lot for info.
And never, as dingg says, visit for two weeks and jump straightaway. Oh. Whoops
We’d never set foot in Lagos before then either, but to be fair we’ve been visiting albufeira area for decades and staring at Rightmove Portugal for years.
Street view and google earth are your friends. Agents mostly don’t reveal locations or addresses - it’s usually chauffeured accompanied viewings only. As sole agency agreements are rare they don’t want other agents approaching sellers or dealing behind their backs. 5% + commission (I’ll say that again - five percent or more) is not uncommon, so they’re hungry little buggers who will fabricate anything to get a bite.
We used Rightmove for searching. Meravista is a good Portuguese version. Locations where indicated are complete fantasy. Power cables, tower blocks (and in one case the other attached villa) can get airbrushed off the photos somehow. The Portuguese agents can seemingly walk at Mach 3, hence their described five minute walk to the beach usually requires half an hour, or a taxi.
Again - streetview! Saves loads of time viewing misdescribed crap.
Additions/extensions with no planning permissions are common. I did hear of houses that were built with two sets of plans - one for the council, one enlarged set for the builders...
We viewed ‘new builds’ with basements that had in fact sat part built open to the elements since 2008 - a bit damp. Surveys are usually just bank mortgage valuations with no technical aspects to them - no mortgage traditionally means no survey unless you specifically seek out a surveyor.
The Portuguese property market is the Wild West compared to the uk.
Tax on property is called IMT - 1 to 6 % depending on price. Additional 0.6% stamp I think. Mortgage amount as a foreigner also attracts a small sub 1% tax somewhere. We used Quinta Finance brokers in vilamoura to arrange a Portuguese mortgage - they really had our backs through the whole thing - highly recommended. With the language barrier we would have literally been stitched up without them, they were priceless.
Never use a solicitor who hasn’t been recommended. Never use a solicitor who is close to the agents. Boundaries, plans, ownership, extensions, paved areas, pools - all needs checking, by somebody very independent (!) from the agents. Fees for conveyancing can be 1% of purchase price. One percent. You’ll need a Portuguese Will - try and get the solicitor to throw it into the deal. Bank account needs a tax/fiscal number to open it.
Budget 10% of purchase price for everything and you’re close.
Cap gains tax is 28% (iirc) so all improvement receipts need that fiscal number on to offset against any sale profit.
We rent ours out to help cover costs. Having a good local management company is literally priceless - pool man, gardener, decorator, builder, everything can be arranged, plus they’re key holders for the alarm system and pay bills etc, deal with council. Brilliant - I think they look after non-rental expats who live there all year round too. Example - I struggled trying to sign up for internet, wasted hours on the phone from the UK, gave up, emailed management co and they had it installed and up and running in about 36 hours... plus it’s faster and cheaper than the uk.
Building from scratch - I have refurbed in the UK, done all sorts, but the paperwork and pace of life would test my sanity I think. If I was fluent perhaps I’d think differently. Building regs here were made much more stringent by the eu about 20 years ago so anything pre 80s could be an uninsulated wreck, or so I was told.
As above, it’s a wonderful place to experience life, so friendly, more sun than California too. May be worth looking at the golden visa scheme - bring money in and you get citizenship. It used to be 500k euros but I think it may have changed. They love the brits and our investment - post brexit UK only passport lanes are one plan they have ready. I’d rent to get a feel for it first - we didn’t purely because we’ve been here so often on holiday. PM if needed, glad to help.
Did I already say do it?!
I note in 2015 on this very thread I thought it was a crazy idea. Whoops.
Ours is a second home, with a nice warm retirement plan in mind in ten years or so.
I used https://britishexpats.com/forum/portugal-89/ a lot for info.
And never, as dingg says, visit for two weeks and jump straightaway. Oh. Whoops
We’d never set foot in Lagos before then either, but to be fair we’ve been visiting albufeira area for decades and staring at Rightmove Portugal for years.
Street view and google earth are your friends. Agents mostly don’t reveal locations or addresses - it’s usually chauffeured accompanied viewings only. As sole agency agreements are rare they don’t want other agents approaching sellers or dealing behind their backs. 5% + commission (I’ll say that again - five percent or more) is not uncommon, so they’re hungry little buggers who will fabricate anything to get a bite.
We used Rightmove for searching. Meravista is a good Portuguese version. Locations where indicated are complete fantasy. Power cables, tower blocks (and in one case the other attached villa) can get airbrushed off the photos somehow. The Portuguese agents can seemingly walk at Mach 3, hence their described five minute walk to the beach usually requires half an hour, or a taxi.
Again - streetview! Saves loads of time viewing misdescribed crap.
Additions/extensions with no planning permissions are common. I did hear of houses that were built with two sets of plans - one for the council, one enlarged set for the builders...
We viewed ‘new builds’ with basements that had in fact sat part built open to the elements since 2008 - a bit damp. Surveys are usually just bank mortgage valuations with no technical aspects to them - no mortgage traditionally means no survey unless you specifically seek out a surveyor.
The Portuguese property market is the Wild West compared to the uk.
Tax on property is called IMT - 1 to 6 % depending on price. Additional 0.6% stamp I think. Mortgage amount as a foreigner also attracts a small sub 1% tax somewhere. We used Quinta Finance brokers in vilamoura to arrange a Portuguese mortgage - they really had our backs through the whole thing - highly recommended. With the language barrier we would have literally been stitched up without them, they were priceless.
Never use a solicitor who hasn’t been recommended. Never use a solicitor who is close to the agents. Boundaries, plans, ownership, extensions, paved areas, pools - all needs checking, by somebody very independent (!) from the agents. Fees for conveyancing can be 1% of purchase price. One percent. You’ll need a Portuguese Will - try and get the solicitor to throw it into the deal. Bank account needs a tax/fiscal number to open it.
Budget 10% of purchase price for everything and you’re close.
Cap gains tax is 28% (iirc) so all improvement receipts need that fiscal number on to offset against any sale profit.
We rent ours out to help cover costs. Having a good local management company is literally priceless - pool man, gardener, decorator, builder, everything can be arranged, plus they’re key holders for the alarm system and pay bills etc, deal with council. Brilliant - I think they look after non-rental expats who live there all year round too. Example - I struggled trying to sign up for internet, wasted hours on the phone from the UK, gave up, emailed management co and they had it installed and up and running in about 36 hours... plus it’s faster and cheaper than the uk.
Building from scratch - I have refurbed in the UK, done all sorts, but the paperwork and pace of life would test my sanity I think. If I was fluent perhaps I’d think differently. Building regs here were made much more stringent by the eu about 20 years ago so anything pre 80s could be an uninsulated wreck, or so I was told.
As above, it’s a wonderful place to experience life, so friendly, more sun than California too. May be worth looking at the golden visa scheme - bring money in and you get citizenship. It used to be 500k euros but I think it may have changed. They love the brits and our investment - post brexit UK only passport lanes are one plan they have ready. I’d rent to get a feel for it first - we didn’t purely because we’ve been here so often on holiday. PM if needed, glad to help.
Did I already say do it?!
Alpinestars said:
A lot of people who took out a mortgage will be sitting on a capital gain now just because sterling has depreciated - even if the property has not appreciated in local currency. That’ll be a shock to some and a hard pill to swallow.
If they took the loan out in Euros, the Fx move will have made them money on the equity but not the debt.If they took the loan out in GBP, the Fx move makes them money on both equity and debt.
In both cases, Capital Gains is only triggered if they sell.
Not such a bitter pill.
loafer123 said:
If they took the loan out in Euros, the Fx move will have made them money on the equity but not the debt.
If they took the loan out in GBP, the Fx move makes them money on both equity and debt.
In both cases, Capital Gains is only triggered if they sell.
Not such a bitter pill.
Taking the loan out in Euro, and sterling depreciating is a disaster for CGT. If they took the loan out in GBP, the Fx move makes them money on both equity and debt.
In both cases, Capital Gains is only triggered if they sell.
Not such a bitter pill.
I have a two bed apartment in Alcobaca (about an hours drive north of Lisbon). It was bought about eleven years ago as I had a bit of cash and wanted to use it sensibly instead of buying some more shiny metal!
i have a small mortgage on it but about two thirds was cash. It was rented out long term for quite a few years (be aware that as a non resident you get taxed on the rent with no consideration for mortgage)
Another reason to purchase was for my own protection. I thought I may move out there sometime. Well, my London house is now on the market! Wish me luck.
Currency. I did well because at the time the fx rate was good. I also had an apartment in Sofia (Bulgaria) which I bought off plan. Cost 45k cash @1.47 ish. Rented it for a while then sold when the fx rate went the other way, in my favour. Sold property for 95k with a rate around 1.20 Nice.
i have a small mortgage on it but about two thirds was cash. It was rented out long term for quite a few years (be aware that as a non resident you get taxed on the rent with no consideration for mortgage)
Another reason to purchase was for my own protection. I thought I may move out there sometime. Well, my London house is now on the market! Wish me luck.
Currency. I did well because at the time the fx rate was good. I also had an apartment in Sofia (Bulgaria) which I bought off plan. Cost 45k cash @1.47 ish. Rented it for a while then sold when the fx rate went the other way, in my favour. Sold property for 95k with a rate around 1.20 Nice.
I believe the income tax is very attractive, nothing we ourselves can make use of yet though.
CGT - all good points and I know it’s the finance forum but it’s not about the money - numbers just don’t stack up when you consider purchase costs and selling agents fees, plus you are gambling on forex with a slow to sell pile of bricks. Our thoughts were simply rent to help make a dent in the mortgage. Man maths : our holidays are now free
I initially approached a very helpful Sarnie last year to raise UK funds but after looking at the shadow chancellor’s various psychotic imbalances it sort of made sense to split things, hence a Portuguese mortgage topped up with gbp. Transferwise was great for moving the proceeds of my kidney sale.
Rental income for us foreigners - the simple tax option is based on taking 35% of total rental as income (65% legally assumed as costs!), taxed at a rate of 26ish percent. So 8.75% is the overall tax rate which is nice. Once over 10k per annum rent, Portuguese vat (Iva) kicks in. Somehow.
It’s our first few months of doing this so not sure exactly how it works yet... but we have a PT accountant who should know.
Roughly, management and cleaning/laundry will knock out about 30% of the rent, then there’s gas (on a rare mains system here), electric, water (££) and council tax (sod all), insurance etc.
CGT - all good points and I know it’s the finance forum but it’s not about the money - numbers just don’t stack up when you consider purchase costs and selling agents fees, plus you are gambling on forex with a slow to sell pile of bricks. Our thoughts were simply rent to help make a dent in the mortgage. Man maths : our holidays are now free
I initially approached a very helpful Sarnie last year to raise UK funds but after looking at the shadow chancellor’s various psychotic imbalances it sort of made sense to split things, hence a Portuguese mortgage topped up with gbp. Transferwise was great for moving the proceeds of my kidney sale.
Rental income for us foreigners - the simple tax option is based on taking 35% of total rental as income (65% legally assumed as costs!), taxed at a rate of 26ish percent. So 8.75% is the overall tax rate
which is nice. Once over 10k per annum rent, Portuguese vat (Iva) kicks in. Somehow.It’s our first few months of doing this so not sure exactly how it works yet... but we have a PT accountant who should know.
Roughly, management and cleaning/laundry will knock out about 30% of the rent, then there’s gas (on a rare mains system here), electric, water (££) and council tax (sod all), insurance etc.
andy43 said:
I believe the income tax is very attractive, nothing we ourselves can make use of yet though.
CGT - all good points and I know it’s the finance forum but it’s not about the money - numbers just don’t stack up when you consider purchase costs and selling agents fees, plus you are gambling on forex with a slow to sell pile of bricks. Our thoughts were simply rent to help make a dent in the mortgage. Man maths : our holidays are now free
I initially approached a very helpful Sarnie last year to raise UK funds but after looking at the shadow chancellor’s various psychotic imbalances it sort of made sense to split things, hence a Portuguese mortgage topped up with gbp. Transferwise was great for moving the proceeds of my kidney sale.
Rental income for us foreigners - the simple tax option is based on taking 35% of total rental as income (65% legally assumed as costs!), taxed at a rate of 26ish percent. So 8.75% is the overall tax rate which is nice. Once over 10k per annum rent, Portuguese vat (Iva) kicks in. Somehow.
It’s our first few months of doing this so not sure exactly how it works yet... but we have a PT accountant who should know.
Roughly, management and cleaning/laundry will knock out about 30% of the rent, then there’s gas (on a rare mains system here), electric, water (££) and council tax (sod all), insurance etc.
Portugal has a tax treaty with the UK that means that any income that can be taxed in the UK will not be taxed in Portugal.CGT - all good points and I know it’s the finance forum but it’s not about the money - numbers just don’t stack up when you consider purchase costs and selling agents fees, plus you are gambling on forex with a slow to sell pile of bricks. Our thoughts were simply rent to help make a dent in the mortgage. Man maths : our holidays are now free
I initially approached a very helpful Sarnie last year to raise UK funds but after looking at the shadow chancellor’s various psychotic imbalances it sort of made sense to split things, hence a Portuguese mortgage topped up with gbp. Transferwise was great for moving the proceeds of my kidney sale.
Rental income for us foreigners - the simple tax option is based on taking 35% of total rental as income (65% legally assumed as costs!), taxed at a rate of 26ish percent. So 8.75% is the overall tax rate
which is nice. Once over 10k per annum rent, Portuguese vat (Iva) kicks in. Somehow.It’s our first few months of doing this so not sure exactly how it works yet... but we have a PT accountant who should know.
Roughly, management and cleaning/laundry will knock out about 30% of the rent, then there’s gas (on a rare mains system here), electric, water (££) and council tax (sod all), insurance etc.
The loophole here is that any such income can be taxed in the UK, rather than is.
So dividends, for example, can be taxed within the UK. But if you have tax residence in Portugal then these can be paid there with no tax whatsoever due to either country.
You can have 10 years of this before paying any tax in Portugal.
Needless to say, HMRC are all over this and you have to prove you have severed all links with the UK to ensure they don't bite you later down the road.
So if you have no property or other links you should be fine. If you do and you retain them it could be difficult.
JulianPH said:
So dividends, for example, can be taxed within the UK. But if you have tax residence in Portugal then these can be paid there with no tax whatsoever due to either country.
You can have 10 years of this before paying any tax in Portugal.
I'd imagine a lot of ears have just pricked upwards.................You can have 10 years of this before paying any tax in Portugal.
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