How to invest in homes in Portugal?

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Investing in real estate is a safe investment.

Real estate has always been a great attraction for those who want to invest their money in low-risk businesses. This sector has always caught the attention of investors from all over the world. In Portugal, investment is made with a particular focus on the large urban areas of Lisbon, Porto and mainly, in the Algarve region where the return is guaranteed. Best of all? You get a property in one of the sunniest countries in Europe, with a lots of sea views and where tourism plays a huge role in the country's economy.

Photo by Sinval Carvalho – Unsplash

Learn how to make a start in the real estate sector in the Algarve and invest like a pro!

Before venturing into property investment, learn some aspects about Portugal and feel included in the Portuguese culture. Seize the opportunities for those who want to buy a house to make a profit, or who knows, to live for part of the year:

Music - Fado is a traditional Portuguese musical genre, considered by the Intangible Cultural Heritage of Humanity. It is a melancholic kind, sung by female or male voices accompanied by the Portuguese guitar. It can be heard in various Fado houses in various cities of the country. When you attend a Fado concert, you may hear something like "Silêncio que se vai cantar o Fado" (Silence - Fado will be sung), it's a heart-touching style, so you should listen to it in silence. The Fado singer most cherished by the public was Amália Rodrigues, you can listen to one of her songs here.

Sport - The sport that moves crowds is undoubtedly football. In every city, as well as in small villages, you can cheer for a football club.   The Portuguese footballer Cristiano Ronaldo is considered one of the best in the world. Another sport with great relevance in the country, is judo, with the most awarded athlete in Portugal, Telma Monteiro, currently making her mark internationally. Portugal, having the Atlantic Ocean all along the western coast, is one of the world's top surf spots, a sport practised by many Portuguese and tourists alike.

Language - Portuguese is spoken in nine countries, 236 million people around the world speak the language of Camões, a poet considered to be one of the greatest figures of Portuguese literature. The countries where Portuguese is the official language are Brazil, Cape Verde, Mozambique, Angola, Guinea Bissau, São Tomé and Príncipe and Equatorial Guinea. Portuguese is still spoken in Macau and East Timor, although it is not the official language. English is also taught from kindergarten onwards In Portuguese schools, therefore a large part of the population speaks English fluently.

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Now that you know a little more about Portuguese culture, find out how you can invest in this small country rich in green landscapes, mild temperatures, delicious food and friendly people.

What is the Best Business to start in Portugal? Two of the best investments where we feel one will get the deserved return is travelling and buying a house. At first glance, they may seem like two separate topics that are not connected at all, but if we tell you that they can be connected giving the best of both worlds?

Buying a house in a foreign country can be the beginning of many trips from short to long seasons. Within Europe, mobility is facilitated by the already existing flow of travel by plane or fast trains. The Algarve region is privileged to have the Faro International Airport with connections to several national and international routes.   Do you know what is required to travel to Portugal from the UK? After Brexit, it was agreed that tourist travel lasting up to six months was permitted by either British citizens travelling to Europe or European citizens travelling to the UK. British citizens entering Portugal, for example, would only need to secure resources for their return ticket and travel insurance with health cover.

By investing in a second home in Portugal, you can monetize it, i.e., you can rent it to tourists and thus get a return on your investment in a short time. One of the advantages is that you can manage the rentals with your stays in Portugal, never giving up your holiday home. This is one of the best businesses present in Portugal today, tourism!

Do you know how to rent your house in Portugal? The place you choose to buy a house for rent is crucial! In Portugal, all regions are popular with tourists, however, there are areas where tourism has already been established for many decades and where foreign families have the habit of visiting the same places regularly. One such case is the Algarve, internationally recognised as a tourist destination of great interest, both for its beaches and the unspoilt countryside without large influxes.

1. As the first step is to find the ideal house, Casas do Barlavento guarantees in its portfolio great options for this goal. Find several properties in the western Algarve here.

2. The houses for temporary letting are termed in Portugal as Local Lodgement (Alojamento Local) and must guarantee a variety of parameters. In order to obtain an AL licence, the property must comply with specific characteristics, such as its typology:

• Villa: Independent or detached building.
• Apartment: accommodation established in a building or part of an urban building.
• Accommodation: accommodation consisting of rooms and may operate in the two options described above.

3. The third step is to register the property as local accommodation. There are two compulsory registrations:

• Local Accommodation Registration - This is done in the municipal council of the area where the property is located through a prior approval (Mera Comunicação Prévia). This registration is free of charge.

The documents required are:

- Copy of the owner's identification document;

- Term of responsibility;

- Copy of the tax document (caderneta predial);

- Copy of the declaration of the initiation of the activity.

• Registration at SEF - The registration can be made at the Foreigners and Borders Service (SEF) website. This register serves to communicate the entry and exit of foreign guests (who do not have Portuguese nationality), within three days of each departure of a foreign guest. The registration is free of charge.

4. You must open an activity in the tax office. The proof of which will allow you to register for the local lodgement. Here we strongly suggest to contact an accountant to advise you on some decisions you will have to make.

5. Finally, the accommodation should conform to predetermined safety rules. In a visible place, install a first aid kit and the national emergency number, in this case, 112. The accommodation should be equipped with fire-fighting equipment. A fire blanket and a fire extinguisher, should preferably be located in the kitchen, or in any place with equipment that produces heat.

All these steps can be time-consuming and complicated if you are abroad, so you can always count on Casas do Barlavento to help you with the licensing of your Local Lodgement.

Can I manage a local accommodation from abroad? A Local Lodgement requires proximity, whether it is for the reception of guests or for cleaning the property after guests' stays. There will also always be a need for a local contact in an emergency. The most effective way to continue in your home country and have a fully functioning local accommodation in Portugal is to contract a property management service.

What is a property management service? A property management service provides everything that local lodgement involves. It provides security for the owner, who can be in a foreign country and still have all their business information in Portugal. In the Western Algarve, Casas do Barlavento provides real-time support and communication of your business.

Casas do Barlavento property management includes the following services:

• Emergency assistance 24h;
• Payment of bills inherent to the accommodation;
• Regular visits to the property when unoccupied;
• Organisation and supervision of maintenance services;
• Personalised services for your guests (restaurant reservations, fresh flowers, champagne, car rental, etc.);
• Cleaning service;
• Responsibility and supervision of quotations and necessary works;
• Reception of guests throughout the week, including weekends and holidays;
• Condominium meetings;
• Assistance with bureaucracy;
• Promotion of your local accommodation by a marketing team.

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All information is communicated in detail through an exclusive Owners Portal. For more information about this service, please contact us.

Is buying property in Portugal a good investment? Buying a house has always been a good investment, whether in Portugal or elsewhere in the world. Even if buying a residence does not bring you an immediate return by making a profit, sooner or later, you will get what you want through the fluctuations of the market.

In Portugal specifically, buying a house includes the chance of obtaining an ARI residence visa, more commonly known as the Gold Visa. This visa can be acquired when you invest in real estate with a value equal to or greater than 500 thousand euros. The investment can be made in one or more commercial or residential properties, whose total value is that mentioned above. Recently changes have been implemented to the Gold Visas, which are applicable from 1 July 2021 and phased until early 2022.   The minimum investment amount will be increased gradually and reduces possibilities for applications in the most populated areas.   It is expected that in 2022, this visa will only be granted to those who want to invest in the interior and Portugal islands, leaving out the large urban centres such as Lisbon, Oporto and the coastal region of the Algarve.

With the changes in the Golden Visas, demand has been intensifying, mainly in property investment as the deadline approaches. The search for other possibilities of investing in Portugal and obtaining residence visas has also increased. There are two other advantageous options, the D2 and D7 visas. The D2 Visa is aimed at foreign investors who want to invest their money in small to medium scale companies. Learn more about these visas here. The D7 Visas are considerably easier to obtain. You must prove you have a reasonable and constant income, as well as a residence in Portugal, own or rent.

Do I pay taxes in Portugal? Portugal is not only praised for its climate and quality of life, but the country also has an attractive tax system for expatriates. Once you arrive in Portugal and register as a taxpayer, thus obtaining your fiscal identification number (NIF), your taxes will be calculated according to your income.

For non-habitual residents (NHRs), special benefits are in place for 10 years. These include:

• Tax exemption on almost all foreign-sourced income;
• Flat rate of 20% for some Portuguese income, such as from specific professions and self-employment;
• Tax exemption for donations or inheritances from direct relatives;
• Exemption from wealth tax.

Of course, there are taxes to be paid, and these are:

• The IMI is the tax paid annually for a property in Portugal, its value may vary depending on the location of the house, as well as the property type. If you acquired the property for permanent residence, you may be exempt from this tax.
• The AIMI is the tax known as the tax on wealth, which affects the owners of properties worth more than 600 thousand euros.

Portugal has become the dream of many, whether for business investment, real estate, or to spend their retirement. The incomparable quality of life and safety attracts more and more foreign investors who fall in love with this country and especially with the Algarve region.

If you are looking for a positive change in your life, contact Casas do Barlavento, we will be happy to be part of the change!