Why property swaps are gaining strength in Portugal going into 2023

In recent times, buying a house in Portugal has become an increasingly complex challenge for many families. In addition to rising house prices and the higher cost of mortgages - as well as more restrictive conditions, namely a more expensive life due to inflation - there is also the problem of a lack of supply of houses for sale. It's no surprise, therefore, that more creative and more advantageous ways of acquiring homes are beginning to appear (or re-emerge), such as house swaps, as Massimo Forte points out in this article prepared for idealista/news.

"At stake is the simplification of the process of meeting between demand and supply, with the objective of alleviating the tax burden of acquiring a home", begins the independent consultant specialising in real estate mediation, detailing that "this is possible through an operation called an exchange of a property, where there is an agreement between the interested parties to carry out an exchange of homes in Portugal. To do so, they determine conditions, settle values and carry out an operation that involves much lower values with less financial effort".

Technical property exchanges Portugal: what are they?

Based on his experience as an estate agent and also as the head of several agencies, Massimo Forte reports that he has done several house swaps. However, in most cases, these were "technical" swaps where the objective was not the exchange of one house for another to satisfy both parties, but to make the purchase operation possible. He gives as an example the case of a property developer who offered to take over the purchase of a buyer's house so that the buyer could buy a new property.

"The buyer's house would be exchanged for the new property he wanted to buy, and the transaction would be quicker and less expensive. Immediately afterwards, the developer would sell the buyer's used property in order to obtain, desirably, the same or a higher value stipulated by the exchange", states the specialist, noting that, as a rule, this whole process was managed and carried out with the support of the real estate agency in charge of promoting the sale of the development.

This type of transaction is called technical exchange, because it is not the exchange of a house for another house for the use of both as a home, but rather an exchange to make an acquisition possible by reducing the recourse to home loans and transaction costs, namely at a tax level, but not only.

House swaps in Portugal: tax and other advantages

The difference between the two values of the properties involved will be the result of the sale. This lower value generally provides a non-subjection of IMT property transfer tax for the exchange of the property of lower value. And in case of exchange of properties, IMT is only levied on the greater of the differences, if there is tax to pay, the burden falls to the buyer who gets the more expensive house.

"Also rare, but possible, if the exchange is really effective, that is, if the exchange is made without involving a difference of values, there is no payment of IMT", indicates Massimo Forte, alerting that "it should be taken into account that, if the difference is less than 93.331 euros and if the acquisition is for permanent residence, then it benefits from the application of 0% rate".

It should be remembered this property transfer tax is the tax paid by the buyer at the time of an onerous transmission of purchase and sale of a property being one of the highest expenses at the time of buying a house.

"The operation of exchange of houses, besides being advantageous at fiscal level to guarantee an exemption or reduction of IMT, is also advantageous at the level of reduction of expenses of deeds and namely, of Stamp Duty. They will be lower because it will not be necessary to do two deeds and it will be enough to do only one deed called exchange deed for real estate assets", analyses the real estate specialist.

Find house swaps in Portugal

So, if buying property seems like an impossible task in Portugal given the current economic climate, and you're interested in a property exchange, look no further. There are a range of properties in Portugal listed on idealista that are up for exchange, known in Portugal as "permuta". Check out our selection.