18:03 PM, 5th October 2018, About 5 years ago 17
My wife and I have spent the last week looking at properties to buy in Portugal. As you might recall, last month I wrote an article entitled “Why UK Landlords Are Flocking to Portugal“.
To cut a long story short, we have decided to stay in Malta, because it suits our lifestyle better. However, that’s a very personal thing so I have decided to write this article to explain why Portugal could be idyllic for others considering a move, especially for tax purposes.
The first little town we visited was Tomar, which is inland about an hour North East of Lisbon. We were blown away by the value for money, the number of expats in the area and how friendly people were. To give you an insight in to what you can get for your money in Tomar check out this link to a property which is being sold by a retired English couple who are downsizing. The agent we dealt with is called Edgar, an owner/founder of the agency marketing this property. He was a pleasure to deal with and I highly recommend contacting him if Tomar is right for you. For people who are looking for incredible value for money and a quiet life, perhaps taking the dogs for a walk and a spot of fishing on the banks of a river in their own property which is full of huge black Carp, this would be perfect. There is also an area close by called Castelo de Bode (the featured image for this article) which is a stunning 65 km long lake surrounded by pine and eucalyptus forests. The town of Tomar itself was built by The Knights Templars and has several quaint cafe’s and bars and a Castle which is a Unesco heritage site. The only reason we discounted Tomar was that we felt it would be too quiet for us. We would miss having fine dining restaurants, pool clubs and a selection of lively bars on our doorstep.
Our second destination was Vilamoura in the Algarve.
The three hour drive down to Vilamoura (400km South) was one of the nicest driving experiences we have ever had, and as Cannonballers that’s saying a lot! The roads in Portugal are superb. They are smooth, fast and safe. The tolls are expensive but you get what you pay for, i.e. no traffic or speed cameras and stunning views on your journey.
The entrance to Vilamoura is arguably the most impressive of any resort we have ever visited.
Vilamoura is about a 20 minute drive away from Faro airport. Locals refer to the area close to Faro as the “Golden Triangle”. It is also home to another established landlord friend of ours (and his lovely wife) who prefer to remain anonymous.
The Marina in Vilamoura has a vast number of upscale bars and restaurants surrounding it. The whole area is beautifully designed and set against the backdrop of Millionaires Motor Yachts and plenty of greenery. We do miss greenery in Malta. The downside is the price of property if you want that view and to be within walking distance of the Marina. It’s a bit like the roads in Portugal; you get what you pay for. Sadly, in Vilamoura Marina, a ‘like-for-like’ property to the one we are renting in Malta is way beyond the budgets for my wife and I. Properties do become more affordable the further out you go but that is not a compromise my wife and I are willing to make.
Another area we really liked close by was Vale do Lobo. It’s a lot less commercialised than Vilamoura but ideal for golfers who want a few nice upmarket restaurants to visit, lovely views and a very nice beach. Again it is on the pricey side if you want the best views.
Our last stop was the village seaside resort of Praia da Luz, which is further West, outside the Golden Triangle, about an hour from Faro airport. The closest city (which has a more “normal” Marina) is Lagos, about 15 minutes drive. We had a wonderful time there with two more portfolio landlord friends of ours who relocated just after George Osborne announced the S24 restrictions on finance cost relief. They are very well settled there, as are their kids who go to the local International School. That was a pleasure to hear because schooling is an ‘excuse’ many landlords give themselves for staying in the UK. A saying I really like in this regard is; “if you don’t like it where you are MOVE, you are not a tree!”
Property prices in Praia da Luz and Lagos are far more affordable but everything is a lot more spread out. My wife and I like having everything on our doorstep. Nevertheless, our friends could not be happier and can see themselves living in that area for the rest of their lives. It was so lovely to see them so settled and happy, because their exile from the UK was entirely motivated by George Osborne’s anti-landlord taxation policies. It was not an easy decision for them to make.
The main reason we have decided to stay in Malta (at least for now) is that we don’t want to put down roots again. To benefit from the Portuguese NHR scheme really means committing capital to property ownership there. To qualify for the tax benefits afforded by the Portuguese NHR scheme, one of the criteria is to prove you have a home there available for personal use 365 days a year. Renting isn’t a realistic option because there are very few (if any) properties in the areas we would like to live in which are available to-let on long term contracts. This is because they can all be rented to golfing fanatics for ludicrous rates as holiday homes in the Summer months.
I am only now recovering financially from a divorce 12 years ago, which required me to come out of an early retirement position and move abroad for tax purposes to deal with the S24 tax issues effectively. Whilst I continue that recovery process, selling a few properties every year with only CGT to pay on capital gains post April 2015 as per the rules for non-residents of the UK, my wife and I are happier to continue to rent in Malta and to travel the World. We don’t fancy taking on another big mortgage at this stage in our lives. We do plan to visit Portugal again though, it was a wonderful experience.
The tax advantages of living in Portugal under NHR are that you will not pay tax for ten years on UK dividends or pensions (excepting those from government service) in either country, and the CGT payable to HMRC on sales of UK properties will be calculated only on the capital appreciation since 5 April 2015 (minus the cost of any capital improvements since then), and minus the personal allowance.
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