Valuing your house in a divorce in Portugal: sell, or keep it and pay the other share

A property valuation on divorce gives you both the same starting point: the market value of the property, meaning its likely selling price today. That figure is the basis for deciding whether to sell and split the proceeds, or whether one of you keeps the property and pays tornas (a balancing payment) to the other.

The value applies to divorce and to separation alike, whenever the property belongs to both of you. It helps to know it before you discuss who keeps the property or whether to sell. The conversation then starts from market data rather than from each person's own guess. Get a free valuation of your shared property

Valuing a property in a divorce in Portugal: what the figure decides

In a divorce or a legal separation of persons and property, almost every decision about the home comes back to one question: what is it worth today? The answer matters for the division of assets, for the compensation payment between spouses and for the asking price, if selling is the route you take.

Dividing the couple's joint assets

When a couple divorces, their joint assets are divided. Joint debts are divided as well, as the Balcão Divórcio com Partilha page explains. The home is often the most valuable asset. Until both spouses accept a value for it, the division cannot move forward.

The division can be left for later. Even so, a divorce application without a division of assets must include a list of the joint assets and their values, according to the ePortugal guide to divorce and separation. So the value of the property comes up at the very start of the process.

Keeping the property and paying tornas

If one spouse keeps the property, they compensate the other for the share that would have been theirs. In Portugal this payment is called tornas (an equalisation payment). The amount depends directly on the value given to the property. A value above the market works against the spouse who stays, while a value below the market works against the spouse who leaves.

If there is still a mortgage, the value of the property and the outstanding loan go into the same calculation. Before reaching an agreement, the spouse who wants to keep the property should find out whether the bank will accept the loan in their name alone. The guide on selling a property with a mortgage explains what happens to the loan when the property is sold.

Selling and splitting the proceeds

If you would rather sell, a price in line with the market stops the sale from dragging on. It also keeps the price from becoming one more point of disagreement. A property listed above the market gets few viewings, and every price reduction needs both of you to agree again.

Before listing, it helps to know what will be left after the agency's commission, paying off any mortgage and sorting out the paperwork. The what's left after the sale tool helps you work this out. Whatever remains is then shared according to the division of assets.

One neutral figure, the same for both of you

Each spouse often arrives with a figure of their own. One bases it on the asking price of a similar flat in the same building. The other looks at the valor patrimonial tributário (VPT, the tax value shown on the caderneta predial, the property's tax record). Neither is the likely sale price: a listing shows what a seller is asking, not what a buyer paid, and the VPT exists for tax purposes.

A value based on market data, the same for both of you, helps keep the discussion on facts rather than on each person's own estimate. It takes into account the features of the property, the local market and comparable properties sold or for sale in the same area. The guide how much is my property worth explains how a property's value is put together.

Before relying on any figure, you should both answer the same questions:

• Is the property a joint asset or one spouse's own asset, under your matrimonial property regime and the land registry entry?
• How much is still owed to the bank, and could either of you cover the monthly repayment alone?
• Does one of you genuinely want to keep the property, or would you both prefer to sell?
• Do you both agree to use the same reference value, worked out the same way for each of you?

A market value is not the same as a valuation carried out for a bank. The guide bank valuation or market study explains the difference between the two and what each one is for.

Valuing a property on divorce in Portugal: property regime, mortgage and market value

The property regime decides what is shared

What gets divided depends on the property regime chosen at the time of the marriage. This regime is stated on the marriage certificate (certidão de casamento). If the couple did not sign a prenuptial agreement (convenção antenupcial), the default rule is usually the community of acquired property (comunhão de adquiridos).

Under the community of acquired property, a home bought during the marriage generally belongs to both spouses. A property one spouse already owned before the wedding may remain theirs alone. The same applies, in principle, to a property received through inheritance or as a gift, even during the marriage.

Other regimes exist. Under general community (comunhão geral), almost everything is shared, including assets owned before the marriage. Under separation of property (separação de bens), each spouse keeps what is theirs: if you bought the property together, each owns the share recorded at the land registry (registo predial).

Some situations are less clear-cut. For example, the property belongs to one spouse, but the mortgage was paid for years with joint money. There may then be accounts to settle between you. If in doubt, check with a lawyer (advogado) or a solicitor (solicitador) before signing any agreement.

With a mortgage, the bank has a say too

If the property still has a mortgage, the loan contract remains in both names. Divorce does not change that. For one of you to take over the loan alone, the bank has to agree to the change.

Before agreeing, the bank checks whether the person keeping the property can cover the repayments alone. It may also order its own valuation of the property. So it makes sense to speak to the bank early, before deciding who keeps the home.

If you decide to sell, the outstanding mortgage is paid off from the sale proceeds on the day of the escritura (the public deed of sale). What is left is divided according to each person's share. The guide selling a property with a mortgage sets out the order of the steps, and the tool what you keep after the sale helps you see the net figure.

Market value, VPT and bank valuation: three different figures

Market value is the likely selling price today, in the area, for a property with these features. It is the basis for working out the compensation payment (tornas) owed by the spouse who keeps the property, or for setting an asking price. It can differ a lot from the original purchase price, especially if the property was bought many years ago.

The taxable property value (VPT, valor patrimonial tributário), shown on the caderneta predial (the property's tax record), is a tax figure. It does not tell you what a buyer would pay today. Using it as the basis for tornas can disadvantage one of you without either of you noticing.

A bank valuation is used to decide how much the bank will lend. It follows the bank's own criteria and was not designed for dividing assets. The guide bank valuation or market study explains the difference, and how a property's value is formed shows what drives the price.

• Before discussing figures, make sure you are both looking at the same number and know where it comes from.
• If each of you brings a different estimate, compare the criteria behind them, not just the result.
• A market value from a single source, shared by both of you, avoids arguing over figures that cannot be compared.

From valuing the property to dividing assets: the steps in a divorce

Every separation moves at its own pace, but the steps nearly always come in the same order. Following that order saves you from having to go back. One example is agreeing a compensation payment before you know whether the bank will accept a change to the mortgage.

1. Work out what belongs to whom

The first step is to establish which assets are jointly owned. Your marital property regime and the land registry provide the answer. The certidão permanente (the up-to-date land registry record for the property) shows who is listed as owner and whether there is a mortgage.

Also gather the caderneta predial (the property's tax record), the escritura (the deed of purchase) and the latest mortgage statement. You will be asked for these documents later, either to divide the assets or to sell. Our list of documents for selling helps you see what you already have and what you still need to request.

2. Find out the property's market value

With a market value, both of you negotiate from the same figure. Without one, each person relies on their own reference. That might be the price paid years ago, a listing in the building next door, or the figure the bank gave when it granted the loan.

A value based on market data and comparable properties in the same neighbourhood gives you a neutral starting point. You can both read the report and see which references it relies on. To understand how this differs from a valuation carried out for a bank, read bank valuation or market study.

3. Speak to the bank if there is a mortgage

If the property still has a mortgage, talk to the bank before agreeing who keeps it. For one of you to take on the loan alone, the bank has to accept the change. It will assess the income of the person staying and may ask for its own valuation of the property.

If the bank refuses, the agreement has to be revisited. Either the property is sold, or the person staying looks for other financing. Knowing this early avoids negotiating an agreement that cannot be carried out. The guide selling a property with a mortgage explains how the loan is paid off at the point of sale.

4. Decide whether to keep the property or sell

Once you have the market value and the bank's answer, the choice becomes clearer. Whoever keeps the property pays the other a compensation sum, known in Portugal as tornas. If you sell, what remains after repaying the mortgage and the costs of the sale is divided according to each person's share.

To get an idea of what is actually left after a sale, use the tool what's left after selling. The exact figures for your situation, including taxes, should be confirmed with a lawyer, a solicitador (a legal professional who handles registrations and deeds) or an accountant.

5. Make the division of assets official

If you agree, the division of assets is formalised at a registry office or before a notary. It can be done at the same time as a divorce by mutual consent, or later, when you are both ready.

Without agreement, the division goes through an inventory procedure (processo de inventário). In that case, the value of the assets is discussed within the procedure itself. A lawyer or solicitador can explain how it works and what each of you should prepare.

6. Register the division or the sale

The final step is registration at the land registry office. If one of you kept the property, the record will show only that person's name. If you sold, the property is registered in the buyer's name.

Keep copies of every signed document, from the division agreement to the deed. They will be useful later, for example for your IRS (income tax) return or if either of you buys another home.

When you disagree on what the property is worth

It is common for each of you to arrive with a different figure in mind. The person hoping to keep the property often sees it as cheaper, and the person leaving often sees it as worth more. Usually both are acting in good faith: one remembers what you paid, the other has seen a listing for a flat in the same building.

Haggling between those two figures rarely settles anything. It helps more to set personal opinions aside and start from a market value based on market data and comparable properties in the same area. The principles behind this work are set out in our methodology.

Agree on how the property is described first

Many disagreements come from the starting information rather than the price. One of you says the kitchen was redone recently. The other points out that the roof lets water in. If you each request an estimate with a different description, you each get a different value, and the discussion goes back to square one.

Before requesting the report, check these points together, with the caderneta predial (the property's tax record) and the floor plan to hand:

• the floor area as stated in the documents, not as you remember it;
• the rooms, bathrooms, balcony, storage room and parking space, if there are any;
• the condition of the property, including the defects you both know about, such as damp, old window frames or plumbing that needs checking;
• any work carried out, and when it was done;
• the floor level, whether there is a lift, and which way the property faces.

Then you request a single report based on that description, and you both receive the same document. If a question comes up later, you go back to the details you agreed on instead of starting again. You can see how the document is laid out in a sample report.

What the report cannot settle

The report is an opinion of market value, meant to support an agreement between the two of you. It does not replace a valuation by a perito avaliador (an expert valuer) appointed in court inventory proceedings. Nor does it replace the valuation a bank carries out when it reviews a change to a mortgage.

Those valuations may not match the figure in the report, because they follow their own rules and serve their own purposes. The difference between the two kinds of work is explained in Bank valuation or market study.

If you still cannot agree

Sometimes, once there is a shared value, the difficulty shifts to another part of dividing the assets. Family mediation is one possible route: an impartial mediator helps you both resume the conversation without deciding for you.

It is also common for each of you to have your own lawyer or solicitador (a legal professional), who can explain the options the law offers in your situation. Tagus Value does not recommend which path to take. The report can be shared with both of you and with the professionals advising you.

Common questions about valuing your property in a divorce in Portugal