Land Ownership Portugal: An Overview

Can foreigners own land in Portugal?

If you are considering buying property or are seeking out land for sale in Portugal, you should know that there are no land ownership restrictions on foreigners in Portugal.

In fact, the Portuguese government welcomes expats through residency schemes and encourages foreign investment into the country. The property market in Portugal provides an attractive investment for investors.

Should you be looking to snap up land in the country, you’ll find plenty of desirable locations, from Lisbon land for sale to plots of land in the north, center, Algarve, and Alentejo regions. You should clearly define which location you would like to buy property in, and for this, a real estate agent or buyer’s agent can come in handy to discuss your options.

Legal Framework for Land Ownership in Portugal

As we mentioned, there are no rules to owning land in Portugal. Whether you are Portuguese or a foreigner, you should face no restrictions. You will need to follow the correct steps for purchasing real estate.

Be aware that if you are looking to buy land to relocate to Portugal, you will need to have a valid residency permit. This is relatively straightforward for EU citizens, who have the right to live in Portugal.

If you are a non-EU, non-EEA, or non-Swiss citizen, you will need to apply for a relevant visa, such as the D7 Visa, the Portugal Golden Visa, or the Digital Nomad Visa.

Importance of working with a real estate lawyer

Purchasing land in Portugal and construction work can be complex, particularly if you do not speak Portuguese or are unfamiliar with the property market. As such, securing the services of an experienced real estate lawyer in Portugal is essential.

For example, you will be required to secure a building permit, and it can be tricky to find the perfect zone to build your dream home and secure a permit. Also note that projects can be rejected for a variety of reasons, such as the environmental implications of the project. We highly recommend that you work with experienced professionals so that you can identify potential areas easily, saving you time and unnecessary hassle.

Here are some key factors to bear in mind: Three Key Essentials to Buying Property in Portugal.

What are the different types of land ownership in Portugal? 

In Portugal, as in any country, there are different types of land and property ownership. Here is a brief overview of the different types of property ownership in Portugal.

• Full ownership or freehold: You have exclusive private property rights to the land and/or the property and are responsible for maintenance costs, etc. Most Portuguese properties fall under this category.
• Surface right: You do not own the land, but you can build and maintain a building on someone else’s land (third party’s property or third party’s land) for a defined period of time or indefinitely. When the surface rights end, the landowner will then become the property owner.
• Usufruct: You can use and enjoy someone else’s property for a defined period of time, but not beyond the beneficiary’s death or for more than 30 years. You can obtain profits as long as the property’s original function is maintained.
• Right of use: You have the right to use someone else’s property for personal or family needs.
• Co-ownership: This is quite uncommon in Portugal and usually occurs in timeshare properties, where you share ownership with other investors in a project or unit.

You will find land to buy in Portugal to be very reasonable compared to other Western European countries. Property prices are also much cheaper when compared to neighboring countries.

When considering which location to buy land, the Algarve is an excellent option. If you are looking to buy land at an affordable rate, you should find that the north and center of the country provide great value for money. Rural land here will provide you with tranquility and escape, and you’ll find property prices very attractive.

Make sure you budget for construction costs and other costs involved. Construction costs will typically fall between €2,000 to €2,500/m2.

How much is the land tax in Portugal?

You will need to pay taxes on land or property at the time of purchase and annually. Note that you will need to have a Portuguese NIF (Portuguese Tax Number) to make financial transactions in the country. You can get your NIF at your local tax office. It is also highly recommended that you open a Portuguese bank account.

Below, you can find an overview of property taxes in Portugal.

Taxes at the time of purchase:

• Property purchase tax: IMT, also known as the Municipal Tax on Onerous Transmissions of Real Estate (or Property Transfer Tax), is a tax imposed on the purchase of property in Portugal. The amount payable varies between 0 percent and 8 percent, depending on factors such as the property’s purchase price, classification type (rural or urban), location (continental Portugal or autonomous region), and whether it will serve as the primary residence or a second home. For blacklisted jurisdictions with favorable tax regimes, the IMT will stand at 10 percent.
• Stamp duty: This is an additional transaction tax that may need to be paid. As a rule, real estate transfer transactions are subject to stamp tax at a rate of 0.8 percent of the amount to be paid in the deed, which is required at the time of house purchase.

Taxes after you have purchased the property or land: 

• Municipal Property Tax. This tax is determined by the municipality where your property is situated and is payable annually. The IMI rates are set by Portuguese municipalities on a yearly basis and typically range from 0.3 percent to 0.45 percent for urban dwellings and can go up to 0.8 percent for rural properties. The IMI is calculated based on the value of the property tax (VPT).
• AIMI (Additional to IMI): For properties with a value of over €600,000, they will be required to pay AIMI, with rates ranging from 0.7 to 1.5 percent depending on the property value.

There is also Capital Gains Tax in Portugal that you should be aware of, should you want to sell your property in the future.

The Portuguese Land Registry

The Land Registry in Portugal is a document that contains useful information about your Portuguese property, such as who the owner of the land or property is and if it is under any encumbrances. Note that there are land registry fees of €250.

It is important to be aware of the Portugal land ownership laws and that you have a lawyer by your side to complete due diligence checks on the property and provide legal support, including ensuring that the property was legally sold.

They can also assist you with the sale and purchase agreement. Our guide to property documentation in Portugal will give you more details about the required documents to acquire real estate assets in the country, which you can review with your property lawyer to ensure you have everything you need.

Goldcrest: Who We Are and How We Can Help You

Goldcrest is a buyer’s agent that is based in Lisbon, Porto, and the Algarve.

As the first buyer’s agent in Portugal, we provide expert, impartial advice on Portugal real estate investments and help you find your dream property. From property search to property acquisition, we have you covered throughout the entire process and beyond.

As a buyer’s agent, what sets us apart from real estate agents is that we work on behalf of you, the buyer, while real estate agents work on behalf of the seller.

If you are looking to buy property in Portugal, don’t hesitate to get in touch. Our team of skilled experts is available to solve all your real estate doubts, offering insightful expertise and strategic advice.