How to buy a house at a Portuguese Tax Authority auction, step by step

What a Tax Authority auction is

When someone does not pay a tax debt, the Portuguese Tax and Customs Authority (Autoridade Tributária e Aduaneira, AT, commonly called Finanças) can carry out a penhora: it seizes an asset of the debtor in order to sell it and pay the debt with the proceeds. The law calls the debtor the executado.

The sale of those assets is a tax sale (venda fiscal) and follows the Tax Procedure and Process Code (Código de Procedimento e de Processo Tributário, CPPT). No court runs it. The seller is the local tax office handling the case, which the law calls the "tax enforcement body".

This guide covers Tax Authority sales only. Court sales, run on the e-Leilões platform, follow different rules: see how e-Leilões works.

The three stages of the sale

Article 248 of the CPPT sets a sequence. Each stage only starts if the previous one received no valid bids.

One floor applies to every stage: the asset cannot be awarded for less than 20% of the value set under article 250 (article 248(5)).

The tax office may also choose another method allowed by law, such as private negotiation (negociação particular) (CPPT, article 252). The notice always states the method in force.

Where the base value comes from

The base value (valor base) is the price from which bids are accepted. Under article 250 of the CPPT:

• for urban property (houses, flats, shops, building plots), the starting point is the taxable property value (valor patrimonial tributário, VPT), the value the Tax Authority assigns to the property for municipal property tax;
• for rural property, it is the updated tax value or the market value, if higher;
• the announced base value is 70% of that figure.

The VPT is not the market value. It can be far below, or sometimes above, what the property is worth. The base value only tells you where the sale starts.

Illustrative example. A flat with a VPT of €100,000 goes to online auction with a base value of €70,000. With no bids, it moves to sealed bids with a base value of €50,000. In the third stage the highest bid wins, but never below €20,000.

Step by step

Who cannot buy

Article 256 of the CPPT excludes:

• judges, prosecutors and tax administration staff, whether directly, through another person or through entities in which they hold a stake;
• non-resident entities subject to a clearly more favourable tax regime, or whose legal rules do not allow the real owners of the capital to be identified.

Foreign individuals can buy. They need a Portuguese tax number (NIF): see buying at auction in Portugal as a foreigner.

No deposit to bid, but a short payment deadline

The CPPT does not provide for a deposit (caução) in order to bid in Tax Authority sales. The 5% deposit exists in court sales by sealed bid. See the deposit guide.

In return, the consequences of not paying are serious. After the award decision:

• the tax office issues a payment slip and the buyer deposits the full price within 15 days (article 256(1)(e));
• for purchases above 500 units of account (unidades de conta, a legal reference amount), the buyer may ask, within 5 days of the award and giving reasons, to deposit at least one fifth of the price in those 15 days and the rest within 12 months (point f). It is a request and can be refused;
• anyone who fails to pay on time is barred from bidding in any tax sale for two years, apart from other penalties set by law (paragraph 4).

After paying: taxes, title and registration

Ownership only passes to the buyer when the transfer title (título de transmissão) is issued. This is the document that proves the purchase. It is issued only after the price has been deposited and the tax obligations met, meaning IMT and Stamp Duty (article 256(5)).

With the title, the buyer applies to the land registry to register the property in their name. The lifting of the seizure and the cancellation of the registrations that lapse with the sale are ordered by the tax office, if the buyer has not already requested them (CPPT, article 260).

The guide I won the auction: deadlines and next steps explains each deadline.

What may not go as expected

• Pre-emption. Anyone with a pre-emption right (direito de preferência), such as a co-owner, is notified and may take the asset at the price of the best bid (article 249(7)).
• Redemption. The debtor's spouse, descendants or ascendants may exercise the redemption right (direito de remição): take the asset at the sale price (CPPT, article 258).
• Payment of the debt. If the debtor pays or the sale is suspended, the sale does not go through.
• Occupied property. The buyer can ask the tax office for delivery of the property, and the office may call on the police (article 256(2) and (3)). See occupied property: what to do after buying.
• Liens that do not disappear. The sale wipes out mortgages and seizures, but not every third-party right (Civil Code, article 824). See liens and charges in a judicial sale.

What if the property is not what was advertised?

Article 257 of the CPPT allows a request to annul the sale within short deadlines: 90 days when there is a real lien that was not taken into account or an error about the asset because it does not match the notice, and 15 or 30 days in other cases. Time runs from the sale or from the moment the buyer learned of the problem, and it is for the buyer to prove that date.