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What is a house swap? Understand this concept

23 MAI 2024
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Mercado Imobiliário Comprar Casa em Portugal Impostos IMT (Imposto Municipal sobre Transações) Investimento Imobiliário Portugal Documento Particular Autenticado (DPA) Heranças Proprietários Escritura Glossário
This type of transaction, which can be interpreted as an "exchange of houses", is increasingly relevant in the property market. Understand how it works.
What is a house swap? Understand this concept
Source: Freepik
Author: Redaction

Bartering and selling a house are completely different concepts, which you should understand if you are trying to deepen your knowledge of the property market. With ever-increasing prices and a more restricted supply, buying a house is nowadays a process that is more difficult to access due to the costs and bureaucracy it involves, namely tax charges and the mortgage itself. In this sense, exchanging a house appears to be a somewhat attractive solution, especially when it comes to tax costs.

In order to explain exactly what this concept is, we've put together a series of pieces of information that will be useful to you, whether you're thinking of selling or buying a house, and that can help you, as a homeowner or buyer, make the decision that's right for you.

What is property exchange?

This transaction, which involves a written contract, also known as an onerous contract, involves two parties transferring, reciprocally and simultaneously, their rights over an asset to be integrated, under the stipulated contract, into the respective parties' assets.

So, in practice, you can interpret a property swap as an exchange of houses between owners. This usually takes place between properties of similar value, but if not, the difference in value is settled.

Take this example, for example: Rodrigo and Nádia are two homeowners, each with their own property, and they've decided to enter into an exchange contract. Rodrigo wants to sell his house for 200,000 euros, while Nádia has her property for sale on SUPERCASA for 350,000 euros. In this situation, they barter, and Rodrigo pays Nádia 150,000 euros, corresponding to the difference in the values of the two properties.

What does Portuguese law say about a swap?

In the Portuguese legal system, property swaps don't have a specific law, but there are several articles in the Portuguese Civil Code (CCP) and the Municipal Property Transfer Tax Code (CIMT) that regulate this modality, and which stipulate that, like sales and purchase contracts, they must be in writing and signed by both parties. The document must also contain information such as:

    - Full identification of the exchangers;
    - Detailed description of the properties exchanged (with information on the area, location, land registry and value attributed to each);
    - Payment terms for any differences in value between the properties exchanged;
    - Deadline for delivery of the properties;
    - Specific clauses, namely regret or cancellation for non-compliance.

What steps need to be taken?

Firstly, you need to sign a Promissory Purchase and Sale Agreement and, if there are mortgages, ask for a distraint to prove that the debts have been paid off - or provisional registrations of the new mortgages. After this, and if the properties are not of a similar value and a difference has to be paid, Stamp Duty and Municipal Property Transfer Tax (IMT) must be paid.

You will need the following documents:

    - Identification and tax number of the contracting parties;
    - Permanent Land Registry Certificate;
    - Caderneta predial urbana (urban land registry) or request for the building to be entered in the matrix (IMI model I);
    - Licence to use the property - if this is after 30th March 2004, you must also submit the Housing Technical File;
    - Energy Certificate;
    - Proof of payment of Stamp Duty;
    - Proof of payment of IMT.

Once all these documents have been assembled, the deed is drawn up, which can be done through the Casa pronta Service or using an Authenticated Private Document.


Advantages and disadvantages

Property swaps can be both advantageous and have some disadvantages, which we'll list below.

Positive points

    - Cost savings;
    - Agility in the process;
    - Possibility of exchanging your home for a property with specific characteristics.

Negative points

    - Difficulty in finding a property equivalent to the one you want to exchange or sell;
    - Need to invest in remodelling work, if applicable;
    - Tax implications.

However, whatever your decision, being aware of the positives and negatives of this type of transaction, you should understand that the help of a specialised professional will be essential to the process, namely a lawyer specialising in real estate law or a real estate agency specialising in this type of business. With this help, you'll be able to obtain valuable information tailored to your situation and property options that match your objectives.

What should I do if I have a mortgage?

If the property you want to swap has a mortgage, you need to consider very specific and significant changes to the property that serves as collateral. This could be a time to renegotiate your credit, if the conditions are met.

Inheritance or co-ownership situations: how it works

In situations where there is co-ownership as a result of inheritance, exchanging shares can enable the fair and full acquisition of the inherited property.

Let's take an example: Tânia and Catarina are sisters, co-owners of two properties in equal shares, 50/50. By exchanging their shares, they will be able to become the exclusive owners of one of the properties, each taking the proportion of their shares.

Thus, the exchange is a fair solution for the division of assets, which works amicably, avoiding conflicts and the need for a forced sale of one of the properties.

However, it must be understood that it only works if there is an agreement between the heirs, which must be formalised in writing and contain all the information relevant to the exchange, such as the description of the properties, values assigned and specified conditions.

In co-ownership, exchange can be a solution for unlocking a property when there is no agreement on the sale.

So you know:
exchange can be an excellent option in the situations we've presented, allowing for lower tax costs and conflict resolution in the case of co-ownership. Ask a real estate agent for more information if you have any doubts and find your dream home!

SUPERCASA can help you. Click here to find your nearest estate agency.
Themen
Mercado Imobiliário Comprar Casa em Portugal Impostos IMT (Imposto Municipal sobre Transações) Investimento Imobiliário Portugal Documento Particular Autenticado (DPA) Heranças Proprietários Escritura Glossário
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