Buying Real Estate In Portugal

Buying and selling real estate in Portugal is a simple, transparent process, but it takes time.

The property market in Portugal is well-established and there are no restrictions on foreigners purchasing real estate, and transaction costs are generally low. Most property is sold freehold. The country’s property registry system is centralized and very reliable. The law protects property, property rights, and the right to access and use one’s own property. It is also a country that easily allows co-deeding of properties, even between unrelated parties.

After languishing for a few years following the financial crisis of 2008, the Portugal property market began to bounce back in 2014 and has been improving ever since. The market has done especially well over the last 6 years. Overall, prices rose 11.4% in January 2020 from a year earlier to an average of 2,060 euros per square meter.

The Buying Process

To start the purchase process, you’ll need a personal fiscal number from the local tax office—if you got a local bank account then you were automatically assigned a temporary one.

While many countries overseas do not require credentials for real estate agents, Portugal does. You’ll find agents in the city with licenses issued by the government.

The process itself is straightforward:

1. Upon finding a property you wish to buy you’ll negotiate and agree offers via email and exceptionally may be required to sign a letter of intent (usually when a holding deposit is requested, mainly in larger cities).

2. Once a price has been agreed to by both parties the lawyer will then write the promissory contract with the seller (contrato de promessa de compra e venda). In order to complete the promissory note you’ll need the following:

Property Registration Certificate (Certidão de Teor)
Property Tax document (Caderneta Perdial)
License of Use (Licença de Utilização)

3. You’ll have to put down a deposit, usually 10% to 30% of the total purchase price (you may need a lawyer to negotiate a deposit in the lower end). The deposit is forfeited if the purchaser does not proceed; if the vendor withdraws from the transaction double the deposit is paid back to the purchaser.

4. The buyer pays the remaining balance of the purchase price, transfer tax (IMT), and any attorney or notary fees.

5. Once everything has been paid (usually within about four weeks of signing the promissory note) you’ll be able to complete and sign the deed (escritura de compra e venda).

6. Finally, you will have to register the deed at the public land registry and tax office. This should be done as soon as possible after signing the deed.

Transaction And Holding Fees

*For Portugal, the registration fees include notary fees, which are listed individually for some other countries where notary fees are not comprised under other fees.

The registration of purchase and mortgage both have a fixed cost of 250 euros each.

Annually, municipal taxes (called IMI or imposto municipal sobre imóveis) are calculated on a sliding scale to a maximum of 7% and are charged on properties using a formula accounting for variables which include the size of the property and how many amenities or entertainment items (such as pools, tennis court, etc.) it contains. Each municipality has the right to charge a slightly different IMI value, which ranges from 0.3% to 0.5%. Older rustic buildings (whose taxable values are normally very low) pay a value of 0.8%.

Special Notes

It never hurts to ask what other rooms an apartment contains, just to be sure of what you’re getting. Ask about separate kitchen, separate living room, any storage spaces, etc.