Buying property in Portugal

Who can buy in Portugal

Although Portugal no longer offers a ‘golden visa’ for property investment, there are no restrictions on who can buy property in Portugal.

However, you’ll need a Portuguese tax number to complete the transaction.

The buying process in Portugal

• Once you’ve found the property you want to buy, it’s common to have a surveyor assess the property’s condition before making an offer.
• If you’re happy with the survey outcome, submit an offer to the estate agent.
• If the offer is accepted, both parties sign the legally binding purchase proposal contract, known as the ‘contrato-promessa compra e venda’, which outlines the sale terms, price, deposit, and completion date.
• You then pay a 10% deposit, which is non-refundable if you withdraw from the sale, but if the seller pulls out, you receive twice the deposit back.
• The property is legally transferred when the property deed, or ‘escritura pública de compra e venda’, is signed by both parties at a notary’s office.
• The final stage involves paying the remaining purchase balance, along with any fees and taxes.

Financing your property in Portugal

When purchasing property in Portugal with a mortgage, having an agreement in principle in place shows how much you can borrow from a lender. This positions you strongly as a buyer, improving your chances of having your offer accepted.

Some sellers won’t accept a mortgage clause within the purchase contract, so speaking to a mortgage broker early is essential so they can include a mortgage clause in the agreement in principle.

In some cases, it’s possible to borrow 100% of the property purchase price by combining a mortgage with a Lombard loan.

Fees and taxes in Portugal

• Before completion, you must pay the property transfer tax, or IMT (‘imposto municipal sobre transmissões onerosas de imóveis’), which is applied at a tiered rate from 1% to 8% for urban properties, with lower rates for primary residences and a flat rate of 5% for rural properties.
• There is an annual municipal property tax called the IMI (‘imposto municipal sobre imóveis’). It ranges from 0.3% to 0.8% of the property’s declared value and depends on the property's location and age.
• For urban properties valued over €600,000, an extra wealth tax called AIMI (‘adicional imposto municipal sobre imóveis’) applies, with rates ranging from 0.4% to 1.5%.
• Notary fees usually range from 1.5% to 2% of the purchase price.
• Stamp duty, or ‘imposto de selo’, is fixed at 0.8% of the purchase price.
• Legal fees are typically between 1% and 2% of the purchase price, plus VAT.