About Portugal

The Algarve is famous for its hundreds of beautiful beaches and championship golf courses. With over 300 days of sunshine per year, the Algarve is a favourite holiday destination for millions of people every year. The beautiful seafood restaurants, relaxing atmosphere and the friendly, charming people guarantee visitors return year after year. With a fantastic climate, warm and sunny weather year round, visitors can really enjoy the variety of leisure and sporting activities that are available.

In 2004, Channel 4’s ‘A Place in the Sun’ voted the Algarve as the best location in the world to invest in property.

The Algarve is now considered Europe’s leading golf destination and it has 30 top-class golf courses for you to choose from. With long sunny days you’ll have plenty of time to play golf late into the evening. The Algarve is a fantastic golfing destination at any time of the year.

Vilamoura is one of Europe’s largest marinas and one of the Algarve’s most fashionable resorts. It is a glamorous location with great restaurants, bars, hotels and designer stores. If sailing is your passion, you can hire a boat in the marina and explore the beautiful coastline. You can also enjoy tennis, horseback riding, wind surfing, deep sea fishing, water skiing and dolphin watching.

Buying in Portugal

Things you need to know before Buying Property in Portugal

Many investors are choosing Portugal as the place to buy property and the Algarve is seen as an attractive location to purchase due to the income that can be made by renting investment properties all year round and also the favourable capital growth. If you are considering purchasing an investment property in Portugal there are various tax implications if you decide to rent this property.

Fiscal Representation

Firstly you will need a Fiscal Representative (Tax Consultant). It is a legal requirement in Portugal to have a fiscal representative and any non-resident with an income arising in Portugal must have a fiscal representative to look after their tax affairs. They will also obtain a fiscal number for you.

Individual Income Tax – IRS

Since 2005, non-residents have benefited from a special tax rate of 15% for rental income. This income is taxed at Portuguese rates. If you rent out your property in Portugal you will need to declare this income on a Portuguese income tax return. There is a double taxation treaty between Ireland and Portugal and also the UK and Portugal, so you are entitled to a tax credit for any tax that you pay on income from abroad. Your fiscal representative will prepare your tax declaration.

Deductible Expenses

It is possible to reduce the taxable income from rentals by calculating the following expenses that are deductable:

1. Included Services: utility bills, gardening or pool cleaning etc.
2. Maintenance: interior and exterior painting, building insurance, condominium expenses etc.
3. Repairs: plumbing and electrical expenses
4. Taxes: Property Tax (IMT) and Municipal Charges
   

All expenses must be documented by proper receipts. These should be in the name of the landlord. Non-deductible items include construction, mortgage and other capital improvements.

Licensing Requirements for Rental Properties

Non-residents must obtain a Touristic Licence if they wish to rent out their investment property. This licence can be obtained from the local council. It is important to obtain this licence as inspectors can fine owners that do not obtain this licence.

Connolly Duignan Lynskey can recommend Fiscal Representatives, Solicitors and Architects to help you with your property purchase in the Algarve. Please contact us for more information.