“You guys really should consider Portugal,” our neighbors Linda and Russ in Sturgeon Bay, Wisconsin, urged us. “We love it there. We own some property just outside a small town, Alpedrinha, and we’ll be moving there – for good! – in February, next year.”
It all looks so simple on HGTV—buying a house in another country.
Trust me: it isn’t!
Sure, it’s fun to see what’s for sale elsewhere and explore international properties online and via the telly. But putting your “boots on the ground” and confirming that what you see represented in all those come-hither Internet snapshots is actually what you’ll be getting can be a real eye-opener. The fun stops and the headaches begin once you make an offer … and it’s accepted.
Why? Take closing costs, for instance.
Apart from any deposit or down payment, in Spain the transaction can cost you about 20% above and beyond the purchase price to cover transfer taxes, lawyer and Notario charges, and an assortment of administrative fees. So, a relatively inexpensive property purchased for 50,000 Euros,would cost about another 10K in € to legally own it.
Still relatively inexpensive, all things considered.
Friends told us that “settlement” costs in Portugal are much lower … and, indeed, they are!
Take purchase and transfer taxes on a property: In Spain, one now pays 8% of the property’s value (its selling price) in taxes. While Portugal has several taxes that can accompany a property’s purchase, if you’re married and the place is your first and primary residence in Portugal, you’ll pay only 0.8% in taxes on the purchase.
That’s ten times the savings (vs. Spain’s), just in taxes!
And Portugal grants most newcomer residents the first three years of ownership tax-free. If you fill out the forms— correctly and on time.
The lower costs to purchase property is one benefit of buying Portugal. The friendly, simpatico, but saudade Portuguese people is another. The history, the magnificent topography, the exquisite monuments, memorials, castles, and cobble stone streets of intimate towns and villages are yet others. Not only is Portugal’s cost of living lower than that in many other countries, but its quality of life is high. Plus, Portugal consistently ranks among the five most peaceful countries in the world, as well as one of the most welcoming.
All told, we made several trips to look at and evaluate properties in Portugal. We stayed in cozy little hotels and inns, wandering around through their towns and cities. We attended seminars for people considering a move to Portugal or already living there. We narrowed our choices and looked at houses in in the Coimbra and Castelo Branco areas.
We found what we were looking for in Lousa – not to be confused with Lousã! – a small village about 20 minutes outside the city of Castelo Branco, with cobble stone streets and a church whose bells chimed as a heart beat, punctuating the daily rhythm of life there.
Because of its proximity to Spain, the privacy of its separate guest quarters with en suite, and the potential of opening some sort of eatery in the property’s former cafe, we purchased the property shown to us by a property agent using the flashlight of his phone. The next day, when we returned to “tour” the town, we met the owner: a lovely, little old lady who communicated with us in a polyglot of Portuguese, Spanish, and (especially) French.
Despite her honesty and answers to our questions, we’ve learned some invaluable lessons about buying property in Portugal. First and foremost, always have your property inspected and its condition evaluated by a qualified professional. If you’ve seen the place online first and gotten excited about it, remember, too, that pictures and descriptions supplied by property agents are a classic case of “what you see isn’t (necessarily) what you get!”.
So, get a second opinion.
Thanks to our lawyer, Liliana Solipa, who represented us through our power of attorney, we were assigned fiscal numbers (NIFs), the property was purchased and put in our names, a bank account opened, the water and electricity turned on again.
That’s when we decided to take advantage of a special sale offered by the airlines and spend a November week in our “new” Portugal home.
With keys in hand and hand on the front door handle, we quickly discovered how much work the place really needed after having been vacant and closed up for more than five years.
I’ll save that for another story.
Shared here are personal observations, experiences, and happenstance that actually occurred to us as we moved from the USA to begin a new life in Portugal and Spain. Collected and compiled in EXPAT: Leaving the USA for Good, the book is available in hardcover, paperback, and eBook editions from Amazon and most online booksellers.