Taxes and legal fees

Put your worries and doubts away by following this check list before buying your dream property in Cape Verde. A lawyer will have to guide you over these but this will prepare you for what is to come.

Stake your claim

Are there any outstanding land charges? Check with a search at the local municipal authority and land registry offices. A property can only be conveyed if there is a valid habitation permit, this assumes that a valid building licence has already been issued.

Ensure the following is on your must have list:

• Certidao do Registro Predial (land registry certificate)
• Planta de Localizacao (map showing officially where the property is)
• Certidao Matricial (tax information certificates).

If the property is not registered, you will also need a Certidao pela Negativa (confirming the property is not registered in anyone else's name) and a Certidao matricial para O efeito (a tax certificate to prove the previous point).

Is everything paid?

Make sure the tax and any bills like electricity, water etc are paid and get evidence such as receipted invoices.

Giving your blessing

Your lawyer will need your power of attorney to act for you in the promissory contract and deed and to ask for tax cards for you. The power of attorney will be made out in Portuguese but you will get an English version. As another safeguard it will have to be signed in front of a notary and legalised by the Cape Verde honorary consul in Liverpool and returned.

First pen to paper

Time to pay your deposit (around 30 per cent normally) and sign the Promissary Contract of Purchase and Sale (contrato promessa de compra e venda) in front of a public notary. This commits the buyer and seller and sets out basics such as price, dates, penalties etc. A property tax called IUP is paid at this point.

Now the deed

Once again before a notary, the final deed of conveyance or Escritura has to be signed, giving the buyer title to the property. Fees for notary, registration and stamp duty become payable at this point, normally 2.5% of the property value.

Log it in

To protect you against third parties, the notary will send a report to the local municipal authority about the transaction. They will then update their records and register the new ownership.

You have the power

Sign contracts with service providers, gas, water, electricity etc. Make sure final meter readings are made if appropriate.

The Taxman cometh

There’s no avoiding him so you might as well stay on his good side. Like most countries, Cape Verde has it’s own variations on the tax rules. They are.

Transfer tax

A flat rate of 3 % is due on the total value, before the deed of purchase and sale.

Holding property / annual rates

Again a flat rate of 3 % on 25% of the total value. This can be paid each April or in 2 half's in April and September.

Capital gains tax

This becomes due if the sale value of a construction plot shows more than a 100 % increase on the original price. Also if any other property makes a 30 % increase on the original price, it will also face tax.

In both cases the gain is taxed at 3 % and must be paid within 30 days of the deed and be accompanied by a capital gains statement (Declaracao de mais valias).

Inheritance /gift tax

That familiar figure of 3 5 % of total value becomes due on any property transferred by gift or inheritance.

Think ahead

It’s probably the last thing you will have on your mind when buying property but it’s well worth completing a Cape Verde will. An English will is perfectly legal but when trying to get probate, a local will can make matters quicker and easier.