Market Insights
5 min read

Step-by-Step Guide to Buying Property in Portugal

Why Buy in Portugal?

Benefits, Lifestyle, and Investment Potential

Portugal has garnered attention as an attractive destination for property buyers. Here are some reasons why:

  • Beautiful Climate: Portugal boasts over 300 days of sunshine annually, especially in the southern regions like the south of Lisbon, the Alentejo and the Algarve.
  • Quality of Life: Excellent healthcare, a relaxed pace of life, and a friendly culture make Portugal an ideal place to live.
  • Cost of Living: Generally lower than many Western European countries, offering good value for money.
  • Safety: Portugal is ranked as one of the safest countries in the world.
  • Investment Potential: The real estate market in Portugal has shown steady growth, offering good returns on investment. Popular areas like Lisbon and Porto see consistent appreciation in property values.
  • Taxes: Some very interesting texes regimes like the Non Habitual Resident (NHR)

Legal Requirements

Necessary Paperwork, Visas, and Legal Steps

Before purchasing property in Portugal, it's important to understand the legal framework:

  • NIF (Número de Identificação Fiscal): The Portuguese tax identification number is essential for any financial transactions in Portugal, including buying property. You can obtain it from a local tax office (Serviço de Finanças) or through a lawyer.
  • Visas: If you plan to live in Portugal, you may need a visa, like the Golden Visa, the digital nomad visa (D8) or the retirement visa (D7). 
  • Property Registration: Ensure the property is registered with the Land Registry (Conservatória do Registo Predial) and that there are no outstanding debts or legal issues.
  • Property Document: Make sure the property has all the legal documents in order and up to date. 
  • Promissory Contract (Contrato de Promessa de Compra e Venda): A preliminary agreement between buyer and seller, outlining the terms of the sale. A deposit (usually 10-20% of the purchase price) is paid at this stage. Final Deed (Escritura Pública de Compra e Venda): The final contract, signed before a notary, completing the property transfer. The remaining balance is paid, and the deed is registered.
  • Final Deed (Escritura Pública de Compra e Venda): The final contract, signed before a notary, completing the property transfer. The remaining balance is paid, and the deed is registered.

Finding the Right Property

Tips on Choosing Locations and Types of Properties

Portugal offers diverse real estate options, from modern city apartments to rustic countryside homes. Here’s how to find the right property:

  • Location:
    • Lisbon: Ideal for those seeking a vibrant city life with good investment returns.
    • Porto: Known for its culture and historic charm, offering more affordable options than Lisbon.d lower prices.Countryside: Areas like the Alentejo offer rural charm and tranquility.
    • Algarve: Perfect for beach lovers and retirees, with a strong market for vacation homes.
    • Silver Coast: Offers beautiful coastal towns with a more relaxed pace an
    • Countryside: Areas like the Alentejo offer rural charm and tranquility.
  • Type of Property::
    • New Builds: Modern amenities and lower maintenance costs.
    • Resale Properties: Established homes, often in prime locations.
    • Renovation Projects: Older properties needing work, which can offer good investment potential if renovated properly.
  • Research: Visit different regions, consult local real estate buyers’ agents, and use online platforms to get a feel for the market.

Cost Breakdown

Taxes, Fees, and Ongoing Costs

Buying property in Portugal involves several costs beyond the purchase price:

  • IMT (Imposto Municipal sobre as Transmissões Onerosas de Imóveis): Property transfer tax, ranging from 5-8% depending on the property value and type.
  • Stamp Duty (Imposto de Selo): Typically 0.8% of the purchase price.
  • Notary and Registration Fees: Approximately €1k.
  • Legal Fees: Around 2,000€ to 5,000€ for legal services.
  • Mortgage Costs: Application fees, valuation fees, and ongoing interest payments.

Ongoing Costs:

  • IMI (Imposto Municipal sobre Imóveis): Annual property tax, calculated based on the property's value.
  • Utilities: Water, electricity, gas, and internet.
  • Maintenance and Repairs: Regular upkeep to maintain the property's value.
  • Condominium Fees: For apartments or properties in gated communities, buildings.

Financing Options

Mortgage Availability for Foreigners and Financial Advice

Foreign buyers can obtain mortgages in Portugal, though terms may vary:

  • Portuguese Banks: Most offer mortgages to non-residents, typically covering 70-80% of the property value.
  • International Banks: Some global banks operate in Portugal and may provide better terms for their clients.
  • Interest Rates: Generally lower than in many other countries, making financing more attractive.
  • Requirements: Proof of income, credit history, and a down payment are typically required.
  • Mortgage Brokers: Can help navigate different options and find the best deal.

Financial Advice:

  • Currency Exchange: Use a foreign exchange specialist to get better rates and reduce costs.
  • Tax Implications: Understand local tax laws and how they affect property ownership and rental income.
  • Legal Advice: Hire a reputable lawyer to ensure all transactions are legally sound.