# To buy in Portugal or go back to Australia???



## Astrogirl72 (Apr 18, 2012)

I am Australian married to a Portuguese man and currently live in Portugal with our two young daughters. We have been looking to buy a Quinta in Portugal and rebuild a ruin to our dream home, however my family in Australia as well as my husbands family here in Portugal think we are crazy and should take out money back to the "land down under" because of the financial crisis we are currently in.

I am so confused as I was looking forward to our new life here, but also now concerned that we may be making the wrong decision. Would love to get feedback from other expats now living here and their experiences with living in this country - being positive or negative.

If we were to stay, we would need to make a living off our Quinta and thought pig farming may be a great option. So any input regarding this would also be wonderful.


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## Tony1 (May 30, 2012)

Astro,

Prices will fall unevenly across the EU. Portugal will actually not be too badly hit, Spain will be hit harder. However consider buying an investment property in Oz and rent in Portugal for say 2 years and then review what you want to do.

Pigs can be a challange if you are not experianced. The price of Olive Oil is down at the moment but that won't last so give some thought to an olive farm. At least that is what we are thinking.

Tony1




we have decided to rent will take a modest hit


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## Astrogirl72 (Apr 18, 2012)

Thanks for your quick response Tony1 and your words of encouragement.


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## Sirtravelot (Jul 20, 2011)

Doesn't Australia hold a better future for your children?


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## canoeman (Mar 3, 2011)

If you need to turn your dream into a *profit making enterprise* to continue to live here, then I think you need to take a really, really hard look at Portugal, current EU crisis and compare to a future back in Oz and be very realistic.
Farming of any sort whether pigs or olives requires investment, expertise and being able to break into a local market, let alone cope with constant changes in EU regulations, which one round of put paid to a friends pig farm overnight, then you have Portuguese bureaucratic nightmare on top even on minor things like buying Agricultural Diesel.

If you didn't need the profit element different kettle of fish.


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## anapedrosa (Mar 21, 2011)

I wasn't sure whether to jump in here as I don't yet live in Portugal, but I have to agree with Canoeman, it depends on your motivation and needs. 

My partner and I purchased land last year and will start to build this year. I am not overly worried about the property value short term fluctuations as we will be moving there to live, our concern is with quality of life. Our income will be coming from Canada. Australia and Canada are in good economic shape compared with Europe right now. 

You mention two young daughters, so I am not sure whether youth employment is at the top of your list. My children (young adults) are able to find work in Canada, though they may grumble about it, they have choices and I am not sure that is the case for many Portuguese youth at the moment. However, if your girls are young, things will change in both countries by the time they are looking. 

If you are wanting to farm in Portugal, I believe there is a program aimed at young people, where via an application there is the potential to use government land and there is an incubator program - they are trying to encourage young people to go back into agriculture. I am not a farmer and I believe it is not an easy life, so some caution here.

By the way, my family and friends in Portugal have also expressed surprise that we are choosing to move to Portugal. We can't wait! This is our situation, I wish you and your family the best of luck whichever path you choose.


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## danlondonuk (May 31, 2012)

Very interesting comments, do those already living in Portugal see property prices falling and us the market still stagnant, I am hoping on creating a bed and breakfast accomodation in eastern Algarve faro regions, have seen an expensive large property with land but would have to sell my uk homes.
The uk weather...constant rain makes me very depressed as I love the warm outdoors lifestyle and have found the Portugese people very friendly, should I wait or as now the exchange rate from uk £ to Euro is favourable, unfortunately the pound could fall against the euro with further money printing here.....Any advice ..Positive and Negative.I have not seen tourism drop in the Eastern Algarve region and feel a bed and breakfast aimed at uk holidaymakers could work?
Greatly Appreciated.


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## canoeman (Mar 3, 2011)

The best buys are going to be from expats wanting to return to home, the Portuguese are now being more realistic over property prices but unless they really need the money are still reluctant to negotiate, Portuguese are the second largest group of homeowners behind USA driven by succession laws, so often they don't really need to sell that second or third home or part share.

B&B in current Portuguese climate, but more importantly the rest of EU including UK where your business is likely to be from, you need to be very realistic with your business plan.
To me the Algarve region is more suited to holiday lets, B&B more suited to rest of Portugal that B&B type customers are more likely to visit.

If this is a really serious proposition, then you should sell in UK first, the possibility of a quick sale here could vastly affect price.


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## danlondonuk (May 31, 2012)

canoeman said:


> The best buys are going to be from expats wanting to return to home, the Portuguese are now being more realistic over property prices but unless they really need the money are still reluctant to negotiate, Portuguese are the second largest group of homeowners behind USA driven by succession laws, so often they don't really need to sell that second or third home or part share.
> 
> B&B in current Portuguese climate, but more importantly the rest of EU including UK where your business is likely to be from, you need to be very realistic with your business plan.
> To me the Algarve region is more suited to holiday lets, B&B more suited to rest of Portugal that B&B type customers are more likely to visit.
> ...


Informative and Practical, yes very serious in the move over and offering an upmarket guesthouse eastern Algarve I agree with you that Portugese reluctant or need to sell in current climate however the exchange rate £ to Euro are favourable it depends which way they go which is anyone's guess, although the uk £ will prob also decline in value as well. Regards dan


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## canoeman (Mar 3, 2011)

UK £'s picked up against € but nothings really that stable at the moment, Spain is the one that could really cause a problem with €, but then the other night reported that just 2 off the UK Banks have 30 Billion at risk in Spain, all effects UK economy.

Just a quick look on Owners Direct lists 10 B&B for Eastern Algarve, doesn't sound a lot but that's just one site, personally I'd be a bit more flexible about area.


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## anapedrosa (Mar 21, 2011)

Might be worth considering that next year the new property taxes start to take effect. I believe this will place more downward pressure on the Portuguese real estate market, as people with second properties evaluate the additional cost of maintaining that property.

In terms of the currency and exchange rates, I've been watching closely the CAD/EUR pair and continue to put off any bulk purchase of the Euro, choosing instead to buy only when I need the Euros to place towards our property and build. My belief is that the Euro will not appreciate significantly within the next year, there is still too much uncertainty in the market. We may see small jumps along the way, but I believe that is it (please note - my belief, I am not an expert). Personally, I am more comfortable holding my funds in Canadian banks until needed, I suspect I would feel the same way about UK banks (meaning I would keep in the UK until needed versus PT).


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## danlondonuk (May 31, 2012)

anapedrosa said:


> Might be worth considering that next year the new property taxes start to take effect. I believe this will place more downward pressure on the Portuguese real estate market, as people with second properties evaluate the additional cost of maintaining that property.
> 
> In terms of the currency and exchange rates, I've been watching closely the CAD/EUR pair and continue to put off any bulk purchase of the Euro, choosing instead to buy only when I need the Euros to place towards our property and build. My belief is that the Euro will not appreciate significantly within the next year, there is still too much uncertainty in the market. We may see small jumps along the way, but I believe that is it (please note - my belief, I am not an expert). Personally, I am more comfortable holding my funds in Canadian banks until needed, I suspect I would feel the same way about UK banks (meaning I would keep in the UK until needed versus PT).


What are the "new" Portugese property taxes and when I. 2013 will they kick in ?


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## canoeman (Mar 3, 2011)

Not new as such, more alteration to existing taxes, some have already kicked in I've added a few notes in italics

IMI_(Rates)_ / IMT_(one off tax paid on purchase by buyer calculated in bands)_
Reduces the period of exemption from IMI_ (Rates)_, even for those who already enjoy 4 or 8 years.
Increasing rates of IMI, especially for vacancy._(this is one that will affect non-residents & 2nd-3rd homes)_
Reducing the value of IMT._(this is a good one for buyer)_
Increase in taxable value of property, especially those prior to 2004, bringing the tax value to market value._(property is currently revalued when sold what they have done now is to revalue any property that has *not* been sold so current owners will pay more IMI)_


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## anapedrosa (Mar 21, 2011)

canoeman said:


> Increase in taxable value of property, especially those prior to 2004, bringing the tax value to market value._(property is currently revalued when sold what they have done now is to revalue any property that has *not* been sold so current owners will pay more IMI)_



This is the bit I was referring to. Many people in Portugal pay incredibly low property taxes and there are estimates that these taxes could increase by up to 700% in some cases. An example, based on a couple I know. They have a seaside property in the Algarve and an apartment in Lisbon, the total annual property taxes that they pay is currently less than 300 euro for the two properties. The total property assessed values (pre-2004) are around 60,000, even in today's market I suspect the new value will be closer to 600,000 for the two properties.

The Portuguese government has directed that all property assessments be updated to market value by the end of 2012 with new tax rates to take affect in 2013. The couple in the example have not yet been given their new assessment. There will be some exceptions to the requirement to pay the new rate (e.g. low income), but I believe that there will be a shock when new bills are first received. 

This is also something to consider when you are buying a property, when you are shown the assessed value, check the date of the valuation. The sale will trigger a reassessment as Canoeman mentioned.


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## canoeman (Mar 3, 2011)

IMI is calculated on the Patrimonial value not the market value, worked to a formula, believe there are Gov set differences for regions, cities etc but our patrimonial value is 69,090€ our market value is or should be 275,000€ 

Portuguese IMI (rates) are still incredibly low by other countries standards, our rates revalued 2009 without the current exemption for 3.500m2 land and a 3 double bed roomed bungalow with a 100m2 basement are only 207€ a friend nearby with a more rustic house 2+1 and about 2000m2 land revalued 2006 68€. but any increases will be a shock.

Any IMI Exemptions are only for a Resident and must be claimed, so make certain it's been done


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## anapedrosa (Mar 21, 2011)

canoeman said:


> IMI is calculated on the Patrimonial value not the market value, worked to a formula, believe there are Gov set differences for regions, cities etc but our patrimonial value is 69,090€ our market value is or should be 275,000€


I had assumed that the Patrimonial value was linked to the market value. Our 2000 sq metre lot (no house yet) is valued at 223643€ (2009) with taxes at 693€ and we expect this to double once our house is built - a 3 bedroom ~220 square metres. 
We are near the coast and the land is Urbana, but that is quite a difference from your assessment. But as your assessment was also done in 2009, it may be that the tax shocks may not be as great as I was presuming it would be.


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## canoeman (Mar 3, 2011)

If you'd really like to get into it download http://info.portaldasfinancas.gov.p...-6A7B34F53371/0/Portuguese_Tax_System_CEF.pdf

IMI is covered Page 105 and Urban property P110 > once you get your head around the definitions like Aa ist's not to bad to understand

This publication is a very good basic guide to the Portuguese Tax system and how it works, but it is *not up to date* on rates or changes to allowances, IMI exemptions etc etc which need to be checked against current year.

You should have received a Patrimonial Provisional it's normally part and parcel of registration with Financas after you've completed Escritura


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## anapedrosa (Mar 21, 2011)

canoeman said:


> You should have received a Patrimonial Provisional it's normally part and parcel of registration with Financas after you've completed Escritura


Thanks for the link.

I received the Caderneta Urbana which includes the Patrimonial Actual (not sure what you mean by the _Provisional_). More specifically, we did receive our first tax bill this year, and though it appears high for PT, it's still much less than we pay in Canada (even when we have a house, we expect the taxes to be 2/3 of our current property taxes for a similar value property/home).

I should add - similar value does not equate to similar quality of life


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## canoeman (Mar 3, 2011)

Maybe because where physically here, but we get IPM004 for the revaluation, a work sheet, with all co-efficients entered, a Provisional Draft then the Patrimondial actual value on the Caderneta


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## anapedrosa (Mar 21, 2011)

canoeman said:


> Maybe because where physically here, but we get IPM004 for the revaluation, a work sheet, with all co-efficients entered, a Provisional Draft then the Patrimondial actual value on the Caderneta


I'll keep my eye out for that, we haven't received that yet.


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