Type of Property Ownership in Portugal: An Overview

Portugal Property Ownership Restrictions

Buying property in Portugal is straightforward for foreign investors. Foreigners have the same rights as residents and citizenship for owning property or land. The Portuguese real estate market doesn’t discriminate based on nationality, which is why foreign nationals face no restrictions on property ownership.

There are also no restrictions on land ownership in Portugal for residents and non-residents. Real estate investors from the European Union, the United States, the United Kingdom, or any other country can purchase all types of rural and urban properties and obtain legal ownership.

If you are looking to buy property in Portugal as a foreigner and want to turn your property into a primary residence, you need a legal status that provides you with residency. There are many visa programs that you could apply for, such as the D7 Visa, Digital Nomad Visa, or the Golden Visa.

Legal Requirements & Documentation to Own Property in Portugal

When purchasing property in Portugal, you need documents for the buying process or mortgage financing. These can include:

• Valid passport or ID card: You must provide proof of identity, such as an EU national ID card, Portuguese Citizen card, or Residence Permit.
• Proof of address: You can use bank statements or utility bills from your home country.
• NIF (Portuguese tax number): You can receive a NIF at your local tax office, which you can use for every property transaction.
• Bank account in Portugal: Although it’s not mandatory to open a Portuguese bank account, it can save you money on international transactions and help you pay property taxes in Portugal.

If you apply for a mortgage, a lender may ask for additional documentation, like:

• Tax returns from the last two years.
• Bank statements that cover the previous 12 months.
• Liability and asset breakdown.
• Proof of consistent monthly income.

Lenders can have different mortgage requirements in Portugal. But in most cases, non-residents interested in the Portugal real estate market often provide a deposit of 20 percent to 30 percent of the property’s purchase price.

For more details on mortgages, check out our Portugal mortgage calculator.

How Ownership Types Work in Portugal

Portugal’s property market offers different ways to title your asset. The main type is Freehold, where you have full rights to your property or land. Other property types include Co-ownership, Usufruct, Surface right, and Right of use.

Full ownership or Freehold

This type of ownership provides the owner with the exclusive rights to possess the property, including the land on which the property is built on. If you buy a Freehold property, you are, therefore, responsible for the maintenance of both the property and the land that it is situated on. As such, you will need to budget for these costs. Most properties fall under this category.

Surface right

With Surface right ownership, you can build and maintain the building using the property under a third party’s land. This includes planting any crops on the piece of land. Surface land ownership can be created for either a defined period of time or can be perpetual. When the Surface right comes to an end, the owner of the land becomes the owner of the property on the land.

Usufruct

Usufruct properties consist of a right to use and enjoy a third party’s property for a set time period. This right cannot be extended after the beneficiary’s death or granted for periods exceeding 30 years.

The beneficiary is able to use the property in the same way as if he were the owner of the property and can obtain natural profits, civic profits, and industrial profits, so long as the original economic function of the property is maintained.

Right of use

Right of use properties involve the right to use a third party’s property. The property can be used to meet your specific needs or the needs of your family.

Co-ownership

Co-ownership of properties is not the most common type of property ownership in Portugal. Co-ownership usually happens in timeshare properties (typically resort condominium units) where you buy with other investors into the same project or unit.

If you want more information about whether there is a homeowner’s association in Portugal, similar to in the USA, you can check out our article: Homeowner’s Association Portugal: An Overview.

Costs, Taxes & Fees of Property Ownership in Portugal

Tax authorities divide property taxes between one-time and recurring costs. These are:

• Upfront costs: Property owners must pay a Property Transfer Tax (IMT), which is progressive (up to 8 percent), and a fixed Stamp Duty (usually 0.8 percent of the purchase price). IMT can be 10 percent for blacklisted jurisdictions. They also pay for notary and registration fees, which are around 1 to 2 percent.
• Annual costs: Owners pay annual property tax based on the property value, location, and other factors. The Municipal Property Tax (IMI) can vary between 0.3 percent to 0.45 percent of the property’s tax value. Wealth Tax (AIMI) may also apply for luxury properties in Portugal, if your stake in the property exceeds €600,000. AIMI can reach 0.8 percent for rural properties.

To learn more on capital gains, check our ultimate guide on Capital Gains Tax in Portugal.

Goldcrest: How We Can Help You 

Goldcrest is a buyer’s agent that is based in Lisbon. 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, helping you with the property search and offering insightful expertise and strategic advice.

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 Portuguese property market. We have cutting-edge technology and metasearch tools at your disposal to provide full market coverage, ensuring the best investment choices and negotiated prices.
• Network of partners: We have a close network of partners, including 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.