Buying Property in Portugal: Your Definitive Guide

The Portuguese real estate market has become highly sought-after in recent years, with expats from all walks of life cottoning on and relocating to this sun-drenched gem in the Iberian Peninsula. From retirees looking to spend their golden years in the Algarve to families relocating to Lisbon, if you are considering buying property in Portugal, then you are on to a winner. 

This article is your go-to guide to snapping up a property in the country. From answering questions such as “Can foreigners buy property in Portugal?” to delving into the key areas to consider, we have you covered.  

We will also provide you with key information on the types of properties you will find here, in addition to practical information such as financing your property and property taxes to be aware of.  

Why should you buy property in Portugal?

Portugal’s real estate market has experienced significant steady growth and has become an attractive and profitable investment option in recent years. Factors such as a stable economy, affordable prices, and a high quality of life have contributed to its appeal among both domestic and foreign buyers. 

Key reasons to buy property in Portugal 

Some of the key advantages of buying property in Portugal include:  

• An investment in a dynamic market with a high return on investment potential  
• Low cost of living compared with other countries in Western Europe  
• Sublime climate with incredible summers and mild winters  
• Top-quality education and healthcare services  
• Seventh safest country in the world, according to the 2023 Global Peace Index 
• The Portuguese, in general, speak excellent English  
• Incredible gastronomy  
• Festivals and events throughout the year 
• No restrictions on foreign property ownership

Can foreigners purchase property in Portugal?  

The first question that you’ll probably want to know is whether it is easy to purchase real estate in Portugal as a foreigner. And the simple answer is yes. There are no restrictions to non-Portuguese buying property in the county, and you’ll have the exact same rights as Portuguese nationals.   

One important consideration is that, if you are looking to move to Portugal, you will need to secure residence in the country. For example, if you are a UK citizen, you will only be able to stay in the country for three months without securing a residency permit.   

Where to Buy Property in Portugal

Cobblestone streets winding through centuries-old neighborhoods, sun-kissed beaches stretching as far as the eye can see, and a cultural tapestry woven with a long history, from the Moors to the Romans. Yes, Portugal has lots to offer buyers.  

In this section, we’ll run over some of the best places to buy property in the country, from the bright lights of Lisbon to the sandy beaches of the Algarve. Note that this list is by no means comprehensive, as you’ll find stunning locations up and down the country. Desirable areas not mentioned here include Aveiro, Coimbra, and Viseu. 

Lisbon  

Aside perhaps from the Algarve, Lisbon is the most well-known part of Portugal. This mesmerizing capital city effortlessly embraces the past and the present, enchanting all who grace its streets. From the cobbled streets of Alfama to the dynamic neighborhood of Baixa, with boutique shopping and buzzing nightlife, you’ll find something for any buyer. Families should consider Estrela, with its wide open parks ideal for spending time outdoors. You also have Parque das Naçōes, with its futuristic cable cars, top-quality restaurants spilling out on the street, and fabulous views of the River Tejo.  

Cascais  

Located just a short drive from Lisbon, Cascais is a charming coastal town that has become synonymous with luxury living. Its beautiful beaches, excellent restaurants, and thriving cultural scene make it a favorite among affluent residents and tourists alike. Cascais also boasts top-notch golf courses, marinas, and a relaxed ambiance, making it an ideal place for those seeking a more refined and laid-back lifestyle.  

Algarve  

Does the Algarve need any introduction? This sublime part of southern Portugal is renowned for its stunning coastline, golden beaches, and excellent climate. It has become somewhat of a mecca for tourists, expats, and retirees seeking a sunny, beachside lifestyle. Particularly in peak tourism season, the coastal towns in the region come alive with internationals from all over the world seeking a slice of the Algarve. Besides its natural beauty, the Algarve offers world-class golf resorts, charming fishing villages, and a lively social scene. Areas like Faro, Albufeira, and Lagos are particularly popular among property buyers. If you are thinking about moving to the Algarve, it shouldn’t take you long to settle in. There is an array of activities to get involved in, such as water sports, yoga classes, and cooking classes, where you’ll be able to get to know fellow expats.   

Porto  

The second biggest city of Portugal, Porto, has evolved quite drastically over the years, now competing with Lisbon as the country’s most talked-about city. Yes, Porto can certainly hold its own, with its charming narrow streets, fabulous riverside restaurants and cafes, and boutique stores. If you are looking for beautiful beaches, you’ll find many close to Porto and many activities to get involved in, such as surfing, yoga, or even cooking classes. Both local and foreign investors will find long-term rentals to be an attractive option, with many students, remote workers, and young professionals creating demand for this type of accommodation in the city, leading to high rental yields. 

Alentejo  

For those looking to escape the hustle and bustle of city life, the Alentejo region in southern Portugal offers a tranquil and idyllic setting. Known for its rolling plains, vineyards, olive groves, and medieval hilltop villages, the Alentejo provides a slower pace of life and a strong connection to nature. It’s a popular choice for those seeking rural retreats and a more traditional Portuguese lifestyle. It would be the perfect part of the country to find a spacious countryside house at a very reasonable price. The Alentejo is often favored by locals as a top vacation destination, given the beauty of the countryside and the delicious food on offer.   

The Silver Coast  

The Silver Coast in Portugal is a captivating region renowned for its pristine beaches, historic towns, and vibrant culture. Situated on the Western Coast between Lisbon and Porto, the Silver Coast is characterized by rugged cliffs, golden sands, and charming fishing villages. If you are looking for a more authentic part of the country, to truly enjoy the local life and embrace staggeringly beautiful landscapes, then the Silver Coast could be the place for you.

Comporta and Melides  

Comporta and Melides, located in the Alentejo region, have gained popularity in recent years. Located on the Southwest coast of the country, Comporta and Melides hug the Portuguese coastline and are characterized by their pristine beaches, sand dunes, and untouched natural beauty. The architecture here is also unique, embracing nature in the design of many buildings while still keeping the typical style of the Alentejo region. Comporta, in particular, has attracted attention from celebrities and jet-setters and has been nicknamed the “Hamptons of Europe,” making it a chic and exclusive destination to move to. 

Step by Step: Buying a House in Portugal

In this section, we’ll provide you with a short step-by-step guide to buying property in Portugal. We will provide more information on some of the steps later in the article, such as financing your property and tips on finding the ideal property.  

Step 1: Financing your property   

Before embarking on the journey of buying a house in Portugal, it’s essential to assess your financial situation and explore your financing options. If you plan to take out a mortgage, research various Portuguese banks to find the best interest rates and terms that suit your needs. There are many different banks offering mortgages loans for foreigners, so it’s important to determine which one provides the best deal based on your requirements. Also, ensure that you have a clear understanding of the associated property costs, including taxes, legal fees, and property registration expenses. 

Step 2: Finding the perfect property   

When searching for properties, you should have an idea of where you would like to buy and the type of property that you would like to purchase. For this, it is worth setting a budget and conducting thorough research online to get a basic understanding of the Portuguese real estate market. When scouting out properties, consider factors such as location, amenities, proximity to essential services, and potential for rental income if you intend to use the property as an investment. It is also worth listing the assistance of real estate professionals who will understand the market and can help you find your ideal property.  

Step 3. Making an offer and negotiation  

 When you find a property that fits your criteria, it’s time to make an offer. If you work with a real estate professional, they can help you with this, enabling you to secure the property at the best possible price. Negotiation is a customary part of the process in Portugal, so be prepared to engage in back-and-forth discussions with the seller until both parties reach a mutual agreement.   

Step 4: Reservation Agreement and Promissory Contract (CPCV)  

Once the offer is accepted and the negotiations conclude successfully, you may have a preliminary step (Reservation Agreement) that is basically used to show your intent to purchase the property and to ensure that the property is “off the market” while you make your final decision. Usually, with the signing of the Reservation Agreement, a reservation fee of between €6,000 and €10,000 will need to be paid. This can be completely refunded should you not move forward with the purchase. However, the refundability of the reservation fee and the terms for the refund to be made will have to be clearly stated on the Reservation Agreement.  

The following step is the Promissory Contract (Contrato Promessa de Compra e Venda – CPCV). This contract solidifies the transaction and typically requires you to pay a deposit, which is often around 10 percent of the property’s purchase price. The CPCV is signed in front of a Notary. At this stage, ensure that you fully understand the terms and conditions outlined in the contract before signing it. The CPCV legally binds both parties to proceed with the sale according to the agreed-upon terms.  

Step 5:  Sign the Escritura (Final Deed)  

The final step in the property purchase process is signing the Escritura, also known as the Final Deed. This is the formal contract that transfers ownership of the property from the seller to the buyer. It must be signed in front of the Notary. Before signing, ensure that you or your legal representative thoroughly review the document and clarify any doubts. At this stage, you will be required to pay the remaining balance of the property price, as well as other associated fees and taxes. Once the Escritura is signed, you become the official owner of the property, and the process is complete.

Three Key Essentials to Buying Property in Portugal

Acquiring a new property, especially abroad, requires focus and careful observation. Here are three key essentials to bear in mind when buying a property in Portugal.  

1. Get your budget straight 

Before thinking about buying a property in Portugal, you should reflect on what finances you have available for the purchase and how much you want to invest. It’s important to find a safe balance between savings (if you already have the full amount that simplifies the equation) and the need to finance part of the costs. 

If you decide on monthly instalments, be aware that these should not exceed 35-40 percent of your monthly net income, just to be on the safe side. 

When it comes to how to actually buy your property, there are several options on the table. 

One-off payment

This option, pagamento a pronto, in Portuguese, involves paying the wholesale price of the property to the seller in one go, normally via a bank check that you hand over when you sign the deed. 

Mortgage loans 

Getting a mortgage, either from a Portuguese bank or one at home and using the property itself as a guarantee against defaulting, is a more common option than a one-off payment. 

Mortgage subrogation 

If there is an outstanding mortgage on the property from the previous property owner, you can change the name of the debtor to your own name, taking on all the rights and responsibilities and making you the new mortgage payer. You have to request this from the same banking entity in which the mortgage already exists. 

One benefit of subrogating a mortgage is that it saves the costs of a new mortgage, but the downside is that the terms and conditions are fixed, and you cannot really adapt them to meet your needs. 

We’ll delve into financing your property in Portugal in more detail a little later in the article.  

2. Select the seller 

Carefully select which seller to buy from. Remember that the negotiation and purchase process can depend very much on who you are buying the property from: A private property seller, real estate agent, developer, or bank. 

3. Choose who to buy with: A Buyer’s agent versus a realtor 

In Portugal, while a realtor (or real estate agent) works on behalf of the seller and will secure a higher commission for a higher sale, a buyer’s agent works exclusively on behalf of the buyer, ensuring your needs are met. From scouting out the ideal property based on your exact requirements to negotiation and aftercare, they will assist you throughout the buying process, reducing hassle and stress.   

Requirements for a Successful Property Purchase

An essential part of the process when buying real estate in Portugal is getting the Portuguese NIF number, a Portuguese tax number that is essential to opening a bank account in Portugal and for completing other important financial transactions in the country. It is highly recommended to open a Portuguese bank account when buying property to avoid transaction fees when making your purchase. There are a variety of Portuguese banks to consider, many of which offer mortgages for foreign buyers.  

You can apply for the NIF number yourself at your local tax office or get an attorney to assist you. If you are a non-EU citizen, you will need to have a fiscal representative. To avoid having to go to the local tax office, you can also apply for your NIF number online. For an all-around personalized and hassle-free service, you can ask our colleagues from GetNIF to help you with getting your Portuguese tax number, alongside opening a bank account remotely.  

Required Documents to Buy Property in Portugal

In addition to your NIF number, which you can get from your local tax office, you will need the following documents: 

• Photo ID: A valid identification document that verifies your identity. 
• Contrato Promessa de Compra e Venda (CPCV): The buying contract or property deed that outlines the terms and conditions of the property purchase. 
• Energy Certificate: This document provides information about the energy efficiency of the property and must be presented to you by the seller. 
• Imposto de Selo: The stamp duty payment, which is a tax required by the Tax Authority for property transactions. 
• Caderneta Predial: The land register document that contains information about the property, including its location, boundaries, and registered owner. 

Having these documents is essential for a smooth and legally compliant real estate transaction in Portugal. We recommend working with an independent lawyer who will be able to assist you with determining the documents you need and completing due diligence checks on your property on your behalf. 

Buying Property in Portugal Pitfalls

Be aware of the following pitfalls of buying real estate in Portugal.  

Legal complexities: We highly recommend working with an experienced real estate lawyer to ensure you will face no legal issues, for example, in checking if the owner has the right to sell or if there are any outstanding debts associated with the property.  

Taxes: Ensure you are up to speed on property taxes, maintenance fees, and other associated fees. 

Property location: Ensure you are completely content with the location of the property and that it is conveniently located, such as close to a school if you are moving with family.  

Title deed verification: Ensure thorough verification of property title deeds to avoid any disputes or legal complications in the future. 

Financing a Property in Portugal

Another important aspect to consider is the availability of mortgages. Generally, residents have greater borrowing options compared to non-residents. If you plan on obtaining a mortgage loan to purchase property in Portugal, it is advisable to determine the maximum amount you can borrow before making an offer. There are several banks in Portugal that offer mortgages for foreigners.  

For residents in Portugal seeking a mortgage, a deposit or down payment typically falls between 10 percent and 20 percent. 

On the other hand, non-residents looking for a mortgage usually require a deposit of approximately 30 percent, although there may be cases where the percentage is slightly lower. Consulting with a mortgage broker can provide further guidance on this matter. 

You can find out more about mortgages in Portugal in our article: How to Get a Mortgage in Portugal in 2023. 

Property Tax in Portugal

When it comes to buying a house in Portugal, you will need to be aware of the taxes that you will need to pay. In this section, we’ll delve into the taxes that you will need to consider. 

Municipal Property Tax (IMI)   

The IMI (Municipal Property Tax) is an annual tax that you will need to pay and is determined by the property’s municipality. The rates range from 0.3 percent to 0.8 percent based on the property type and location (how much tax for IMI will depend on whether the property is located in an urban or rural area). The IMI is calculated on the property tax value (VPT), which is generally lower than the market price. Properties in rehabilitation areas with completed works may be IMI-exempt for three years, and if registered as a permanent residence, the exemption can be extended for five additional years upon request.  

Property Purchase Tax (IMT)  

The IMT (Municipal Tax on Onerous Transmissions of Real Estate) is a property transfer tax. The property transfer tax rate varies from 0 to 8 percent based on factors like property type, location, purchase price, and intended use. If the buyer is a tax resident in a blacklisted jurisdiction, the rate increases to 10 percent. The property transfer tax must be paid before the purchase is completed, and it’s calculated based on the property value or declared amount in the deed. You can use an online calculator to determine the exact percentage.  

You can calculate IMT (property transfer tax) using our Portugal property tax calculator.   

Stamp Duty 

Imposto do Selo (Stamp Duty) is one of the oldest state taxes and is an additional transaction tax for real estate transfers. Typically, it amounts to 0.8 percent of the deed’s total value and must be paid at the time of purchase.  

AIMI (Wealth Tax)   

If you’re investing in a higher-end property in Portugal, take note of the Portuguese Wealth Tax (AIMI). This post-purchase tax applies to property worth more than €600,000. There are three levels of taxation based on property value:   

• 0.7 percent tax for properties valued between €600,000 and €1 million  
• 1 percent tax for properties valued between €1 million and €2 million  
• 1.5  percent tax applied to property worth more than €2 million  

The €600,000 threshold applies individually. If the property is jointly owned with your partner, AIMI will only apply if the property’s value exceeds €1.2 million.   

Captial Gains Tax   

When you sell your Portuguese property, any capital gain from the sale may be taxable. Capital gains refer to the profit made from the property’s sale.  

You need to include the purchase details of the property, including the price paid and any invoices for renovations, in your tax return for the year of purchase. These details will be considered in the capital gains assessment.  

However, if you reinvest the total selling price in a new home, you may be exempt from capital gains tax. This exemption applies if the property sold was your permanent residence and corresponds to your tax address. To qualify, you must purchase a new property and reinvest the selling price within 24 months prior to the sale or 36 months after the sale. By informing the Portuguese Tax Authority of your intention to reinvest, the capital gains tax is suspended.  

Once you’ve purchased the new property, the tax authorities will calculate the profit and verify that you used it to buy the new home. Remember to document the new property as your family’s permanent residence within 12 months after the reinvestment.  

You can find out more about the intricacies of property tax in our article: Property Taxes in Portugal 2023: An Overview. 

Can you purchase a house in Portugal with crypto?   

In Portugal, it is now possible to purchase a property using Bitcoin. The first recorded instance of this occurred in May 2022, when an investor bought a property in the city of Braga using cryptocurrency. It is also possible to sell your house for crypto in Portugal. 

Maintaining and Managing the Property

Below, we’ve highlighted some important information relating to property management and maintenance in Portugal.  

Property maintenance  

Alongside working with a lawyer to conduct due diligence and working with a surveyor to ensure there are no issues with the interior or exterior of the property, it is important to continue to maintain the property, particularly if you are looking to rent it out or sell the property in the future.   

Homeowner Associations (HOAs) in Portugal   

In Portugal, properties featuring shared elements like buildings, amenities, or land follow a co-ownership system similar to condominium ownership in the United States, albeit without the presence of homeowner’s associations. This arrangement allows multiple owners to share ownership responsibilities and benefits without the formal structure of an HOA.  

You can find out more in our article: Homeowner’s Association Portugal: An Overview. 

Finding property management services  

 If you are renting your property out, it can be worth working with a property management company to take care of the upkeep of the property on your behalf.   

You can find out more in our article: How to Find a Property Manager in Portugal.  

How We Can Help You Secure Your Dream Home

Goldcrest is a buyer’s agent that is based in Lisbon, Porto, and the Algarve. We provide expert, impartial advice on real estate investments and how to buy property in Portugal. From scouting out the perfect property through to property acquisition, we have you covered throughout the process.  

If you are looking to purchase 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.    

What’s more, with our sister companies Global Citizen Solutions and GetNIF, we are your one-stop-shop for all things related to residency, citizenship, and setting up your NIF number in Portugal. Why not book a non-binding call with us today to find out more about your options? 

Why choose Goldcrest?   

• Local knowledge: With offices located across Portugal, our presence nationwide allows us to assist you personally across the country.  
• Independent service: As an independent buying agent, we do not represent any development or project. Our service is entirely tailored toward each individual client, providing you with everything you need to secure the perfect property at the best possible price. As an impartial advisor on the market, we work solely on behalf of our client and provide a service tailored to your needs and requirements.   
• Streamlined process: Our real estate agents speak English and Portuguese, and our service is completely focused on providing you with a hassle-free buying experience, saving you time.   
• Experienced team: Our expert real estate team has a vast local knowledge of the real estate market. We have cutting-edge technology and metasearch tools at our disposal to provide full market coverage, ensuring the best investment choices and negotiated prices.  
• Network of partners: Our network of contacts includes lawyers, property management services, builders, architects, designers, and landscape gardeners, again saving you time and hassle by providing you with trusted experts in their field of work.
• Member of the AIPP (Association of International Property Professionals), delivering company best practices and upholding professional values. 

Member of the AIPP

Goldcrest is proud to announce that we are a member of the AIPP (Association of International Property Professionals).  

Based in London since 2006, over 380 corporate members in 31 countries are part of the AIPP association, which delivers consumer education and protection, industry best practices, and business development.  

AIPP provides support in three key areas:  

• International professional accreditation 
• Sales promotion and client leads 
• Knowledge, training, and community

This AIIP seeks to improve standards for buyers of foreign property. As a member of the AIPP, we are best positioned to help foreign buyers secure their dream home in Portugal.