Buying property in Portugal can be a straightforward and rewarding process, especially for those looking to invest in a place known for its beautiful landscapes, rich history, and warm Mediterranean climate. Whether you´re considering a home as your permanent residence or an investment opportunity, here´s a step-by-step guide to help you navigate the process of buying property in Portugal:
1. Research and Budget: Begin by researching the different regions in Portugal and determining the type of property you desire. Take a look at our ´Life in the Algarve/Lisbon´ content to help you though this and consider your budget carefully and account for additional costs like taxes, notary fees, and legal expenses.
2. Engage a Real Estate Agent: It´s highly recommended to work with a licensed real estate agency like Casaiberia who is familiar with the local market and speaks your language. They can assist you in finding suitable properties, negotiating deals, and navigating legalities.
3. Property Selection: With the help of your agent, visit properties that match your preferences and budget. Take your time to explore different options, consider the location, amenities, and potential for rental income if you´re considering an investment property.
Types of Property in Portugal :
- Villas (Moradias Independentes) & Townhouses (Moradia Germinadas) : - Apartments (Apartamentos) - Farmhouses (Quintas) - Estate Property (Herdade) - Historical Properties/Manors (Casas/Propiedades Senhoriais) - Golf and Condo Properties (Golf e Condominium fechados) - Investment Properties (Propiedades de Investimento) - Types of Typologies : Studio (Estúdio), T1 (One Bedroom), T2 (Two Bedroom), T3 (Three Bedroom).....
Often, you may also see typologies displayed as T2+1, this means this property has two bedrooms, plus an extra division that can be used as a bedroom, office, storage etc. This is often done to help reduce the annual tax on the property.
4. Due Diligence: Conduct a thorough due diligence process to ensure there are no outstanding debts or legal issues tied to the property. Your lawyer and real estate agent will assist you in this process.
- Property Tax Registration (Tax Office) - Property Registry Document (Conservatoria) - Property License (Habitation, Commercial....) - ID Documentation (Sellers) - Energy Efficiency Certification (Valid for 10 Years) - Blueprints - Technical Consruction Document (Properties from 25/03/2004 onwards) - Other documents applicable.
5. Preliminary Agreement (Contrato de Promessa de Compra e Venda): Once you´ve found the property you wish to buy, you and the seller will sign a preliminary agreement. This document outlines the terms and conditions of the sale, including the price, payment schedule, and any extra specific clauses. When you reach this process you´ll make a down payment of 10% - 30% of the transaction value, this can be pais in bank transfer or check. You will need the following documentation and Information to complete this phase :
- ID Documents (All buyers) - Confirmed and agreed purchase price - Payment terms - Inventory (If Applicable) - Tax Numbers (NIF of all buyers) - Final Deed prevision date - Property Surveyor (Optional, not mandatory) - Adicional Clauses (Ex. Mortgage, construction terms, etc)
6. Financing (if applicable): If you plan to finance the purchase, explore mortgage options from Portuguese banks or your home country´s financial institutions. Have your financial documents ready for the application process. You will have to work with a licensed mortgage broker to assist you in this process.
Contact-Us for a detailed list of the documents you will need to apply for financing in Portugal based on your country of residence.
7. Final Deed (Escritura): Once all the necessary points are complete, and financing (if any) is in place, you and the seller will sign the final deed at the notary´s office. This step transfers ownership of the property to you, and you´ll pay the remaining purchase price and associated fees at this time. Simultaneously, you´ll need to pay the relevant property transfer taxes (IMT) and stamp duty.
Some of fees to take in mind :
- Stamp Duty (Imposto Selo) : This is a one off payment based on 0.08% of the transaction value. - Property Transfer Tax (IMT) : IMT stands for Imposto Municipal sobre Transmissões Onerosas de Imóveis, which translates to Municipal Property Transfer Tax in Portugal. It is a tax applied to the transfer of real estate property in the country as is payable by the buyer. First-time buyers, Portuguese residents, and properties located in low-density areas may be eligible for reduced IMT rates or exemptions, depending on specific conditions set by the government. It´s important to factor in the IMT when budgeting for a property purchase in Portugal, as it can significantly impact the overall acquisition costs. The tax is usually paid by the buyer before the property transaction is completed and must be settled with the tax authorities. To ensure compliance and accurate calculations, it´s advisable to seek advice from a legal professional or a qualified tax consultant when dealing with IMT in Portugal.
See the link below to calculate the IMT & IMPOSTO SELO : https://www.apemip.pt/simulador-de-imt-e-is/
8. Registration and Taxation: After the final deed is signed, the property must be registered with the local land registry. If this will be your fiscal residence, you will have to update your fiscal details.
9. Ongoing Costs: As a property owner in Portugal, be aware of the ongoing costs, such as annual property taxes (IMI), utilities, and any maintenance fees if the property is part of a condominium.
It´s essential to have a good understanding of the process and work with professionals who can guide you through each step to ensure a smooth and successful purchase. While buying property in Portugal can be relatively easy, especially for EU citizens, seeking legal advice and the support of experienced professionals will make the process much more manageable and secure.