Investors Guide to Cape Verde

The Purchasing Process

Purchasing property in Cape Verde follows a very similar process to purchasing in Europe due to the close ties the country has held with Portugal throughout history. Foreign residents can freely purchase property in Cape Verde and although it is not a legal requirement to use a solicitor when purchasing, it is highly recommended. A solicitor can arrange to obtain the necessary tax cards required by the local taxation offices. When choosing a legal firm it is most advisable to select a company specialising in Cape Verde real estate.

Once a buyer has found the property of their choice, a holding deposit of between €3,000 and €6,000 is placed. The solicitor will then request the relevant paperwork to ensure that the property to be purchased is fully compliant with legal regulations and presents a safe purchasing option.

The reservation deposit of between 10% and 30% of the purchase price, minus the holding deposit, will be required upon signing the Private Purchase Contract (PPC). Depending on the development and also the stage of construction, staged payments can vary. If the development is within a short time frame of completion, it is possible that the remainder of the payment will be required upon completion.

Fees & Taxes

Fees associated with purchasing property in Cape Verde amount to approximately 13% of the purchase price. While the transaction costs associated with real estate purchase are considered to be quite high, the taxes in Cape Verde are moderately low. There is currently no double taxation treaty between Cape Verde and the UK, yet the taxation paid in Cape Verde can be reduced against the income taxes paid in the UK. The Cape Verde Escudo currency (CVE) cannot be transferred out of the country, so buyers are often advised to open two bank accounts in both CVE and Euros. The Escudo account can be used for paying taxes and property maintenance fees or receiving a rental income from within the country. The Euro account can be used for transferring funds outside the country.

• Notary fees – 3%
• Sales tax – 3%
• Conveyance tax – 3%
• Title deeds – 2%
• Registration fee – 2%
• Rental income tax - 20%
• Property tax is levied annually at 0.075%
• Capital gains tax is a flat rate of 3% if the sale price or market value increases more than 30% of its original acquisition price.
• Inheritance and gift tax is a flat rate of 3% on the attributed value

Financing the Property

The Cape Verde property market for overseas investors is still in its infancy, so the mortgages obtainable within the country are continuously being modified. The newness of the market can present some limitation with obtaining financing from the UK, yet various banks and specialised mortgage providers do offer a variety of services. Structures may vary between the providers used, so it may be ideal for buyers to research their options to source what it most suitable for each individual.

It is generally understood that the prices of land and property in Cape Verde is currently at very competitive rates due to the reasonably limited sources of property financing. As the market grows and the financing options become more readily available, it is expected that property prices will rise in line with the market growth.

Local banks currently offer financing options to non-residents as Euro mortgages for purchasing re-sale and off-plan properties. Other options for financing that can be arranged from the buyer’s home countries include re-mortgaging an existing property and equity release.

• Financing can be arranged for Purchase, post-finance, construction, re-financing and raising capital
• Minimum loans from around €25,000
• Repayments of up to 30 years
• Proof of income will be required
• Up to 75% LTV of the bank’s appraised value or the purchase price, whichever is lower
• Loans can be arranged in either Cape Verde Escudos or Euros

More about overseas property finance
Visitors Guide to Cape Verde
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