All systems go!

During our apartment hunt, we actually had a hard time deciding between attempted apartment number two and the place we are destined for.

This place had some great features such as air conditioning, parking, and a terrific location across the street from the Fundação Gulbenkian gardens. The kitchen is a good size – bigger than our current place, although maybe not as large as the apartment we wound up walking away from. The bedrooms were also smaller, although the apartment had more room overall, and an extra room that will be perfect as my office/studio.

But the other place had so much panache, and it was less per month, so we opted for it instead … and we saw how that turned out.

So, back to place number three we went. I decided that I’d make an offer at a lower price. Since I had a couple of rental websites giving me average prices for similar places in the neighborhood, I kind of split the difference in my proposed price.

Now, an interesting thing about this place is that the owner lives in China. Evidently, he’s never seen the apartment – he bought it to qualify for Portugal’s Golden Visa program, but he currently still lives in China and all his properties are managed by his realtor, Mindy.

Mindy is also Chinese, but has lived in Portugal awhile, and has a lot of family living here and in France.

Mindy submitted our proposal to the owner – but she decided the price was still too high, so she put in the offer for a couple hundred less than my number! I was a bit surprised when she told me, since it never occurred to me that a realtor would do that. However, it all worked out in the end since the owner approved the offer.

The next step was contracting. As I’ve said previously, this is where things can get sticky.

The contract arrived in my mailbox, in Portuguese of course! I spent some time looking it over carefully and checking the language in Google Translate and Lingue. Overall, it looked more or less as I was expecting with no surprises, but there was one clause that confused me.

What I seemed to be reading was that we would only pay the owner 75% of the rent and pay the other 25% to the Portuguese IRS. I couldn’t quite figure out the details, and Mindy was having a real hard time explaining them to me. I got that the total was the amount we had previously agreed on, so that was good, but the rest of it was beyond my grasp.

Luckily, Leonel the accountant was able to come to the rescue, along with our Porto realtor Alina.

Here’s the deal – since I’m renting the apartment in the name of the business, different rules apply than individual rentals. After a certain Euro per month threshold, the regulations specify that the business renter pay a portion of the owner’s taxes directly. The amount of taxes is predicated on the total monthly rate and the term of the lease (in our case, two years with the option to renew).

The reason this caught me by surprise was that we didn’t meet the threshold for the Porto apartment, so this had never come up in our negotiations here. Leonel told me that he’d prepare all the necessary government payment statements at the appropriate time and that the contract was fine to sign as is.

This does give me a little insight into the people who wouldn’t rent to us under the business name – individual renters are taxed less, and the tax payment doesn’t go directly to the IRS, it’s up to the owner to declare. Just speculating, but if an owner wasn’t scrupulous about reporting rental income, it would be a lot easier to keep more money in the pocket …

We did make a few small concessions in the negotiations:

• The was no washing machine in the apartment, although there is a hookup. The owner was willing to put a unit in, but the machine we bought in Porto is a washer/dryer combo, and we like it – it plays the most cheerful little music when the cycle is complete, we always crack up when we hear it. We’re keeping it!
• There was also no microwave. Once again, the owner was willing to buy one, but we want to get one of the new microwave/toaster oven combo units – and we’re probably going to get something better for ourselves than he would have.
• The biggest concession is that we agreed the owner didn’t have to paint before we moved in. There are a few patched holes that will look better with some paint. The good news is that Mindy has painters that she can refer us to, and services are generally really inexpensive in Portugal.

So, it looks like we’re ready to go! I have already transferred two months deposit to the owner, and we’ll hand over the first three months rent (less 25%, of course!) when we actually sign the paperwork. Of course, that has to happen in Lisboa, so we’ll be making a trip back – and this trip will be just the first of a whole series of logistical steps in the moving process, so stay tuned for lots more about that!