What do I need to formalize the sale of my house?

Promissory Contract for the Purchase and Sale of the Property

This is the first step after entering into an agreement with the buyer in order to safeguard the rights and establish the duties of both parties. It is a written document, signed by the person promising to sell and the person promising to buy, in which both sides agree to sign a definitive contract at a future date: a public deed of sale.

What are the advantages?

• Officialisation of the deal within the established timeframe;
• Legal certainty;

This document will give you time, if necessary:

• Finalize the construction of the property;
• Wait for the amount needed to buy the property, on the part of the buyer;
• Wait for the buyer's bank financing to be approved;

What should be included in the Promissory Purchase and Sale Agreement?

• Identification of the parties involved from full name, address, marital status, citizen's card number to tax number;
• Identification of the property, from its type and location to its land registration and description;
• The purchase price of the house and the payment method;
• The amount given as a down payment - this amount is usually paid after the promissory purchase agreement has been signed;
• Date on which the contract is expected to be formalized: deed;
• Indication of penalties to be applied if the deed is not formalized;
• Building licence;
• Clause to sell the property free of any liens or encumbrances

How do I draw up a draft contract?

You can download the model draft contract from the Land Registry Online website and adapt it to your situation.

What happens if the Promissory Contract for the Purchase and Sale of the Property is not honoured?

If the seller fails to fulfil the contract, he will have to return the down payment, doubled, to the interested party. On the other hand, if the respective party fails to fulfil the contract, the owner can keep the down payment. The defaulting party can also go to court to ask for specific performance of the contract, with the aim of obtaining a judgement that allows the promissory contract to be enforced.

Is it possible to cancel the Promissory Contract for the Purchase and Sale of the Property?

Yes, it is possible. However, cancelling the Promissory Contract for the Purchase and Sale may imply non-compliance with the contract and thus sanctions such as:

• Owner: Pay double the amount given as a deposit
• Buyer: Forfeit the deposit

Nevertheless, you can always express your desire to cancel the contract and try to reach an agreement with the owner/buyer. To protect yourself throughout the process, get the help of a lawyer so that you are aware of your legal rights and duties.

Public deed of sale

The property deed is the conclusion/officialization of a contract in which the buyer becomes the legal owner of the property, through registrations made at Notary Offices, Lawyers, the One-Stop Shop at the Conversatória, the Casa Pronta Service Counters or through a notarized private document that is later legally communicated.

What documentation is needed to make the purchase of a property official and proceed with the deed?

Back to 2nd Phase: Which documents do I need to sell my property?

• Civil and tax identification documents for the parties involved;
• Property Registration Certificate or Certificate of Content;
• Urban Land Registry or Request for Registration of the Property in the Headquarters, issued by the Tax and Customs Authority;
• Usage License (in the case of properties built after August 1951);
• Housing Technical File (if the Housing License was issued after 30/03/2004);
• Infrastructures Certificate (if you have an Allotment Permit registered since 1992, without providing any reasons and if it is the first transfer);
• Energy and Indoor Air Quality Certificates for buildings;
• Proof of payment of Municipal Property Transfer Tax;
• Proof of payment of Stamp Duty;
• Declarations of Exercise of Right of Preference (if any);
• Toponymic Certificate (if available);
• Declaration of outstanding loan amounts (if any);
• Promissory Contract for the Purchase and Sale of the Property;
• Declaration of Municipal Property Tax;
• Declaration of condominium charges;

Does the deed cost anything?

There are costs associated with signing the contract in question:

• Stamp duty on the transaction: 0.8%
• Stamp duty on the credit (if it exists and is over 5000 euros): 0,6%
• Registration of the deed using lawyers, a one-stop shop at the registry office, the Casa Pronta service, or a private/public notary.
• Payment of Municipal Property Transfer Tax

Taxes payable on the sale of the property

After formalising the property deed, it must be communicated to the Tax Authority, and if there is a positive difference between the purchase price and the sale price of the property, capital gains will be generated, which will effectively be taxed.

Read the article "Capital gains taxation: Find out how to minimise the payment".

Exemption from paying capital gains

There are not always taxes to pay after the sale of the house, for example in the case of:

• Purchase took place before 1 January 1989;
• Use of the sale value to buy a permanent home within a maximum of 36 months;
• Loan application, if you use the sale value to pay off the respective debt, for a transitional period of 5 years and the seller does not own another residential property.