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Portugal is a top pick for foreigners who want to invest in real estate. It offers breathtaking scenery, a captivating culture, and hospitable locals.
Nevertheless, buying property in a foreign country can be daunting, particularly with all the laws and regulations involved.
Fear not! This guide is here to make it straightforward for foreign buyers to comprehend how the property market works in Portugal. We'll explain everything you need to know in a straightforward and easy-to-follow manner.
Can you purchase and own a property in Portugal as a foreigner?
If you are American, we have a dedicated blog post regarding the property buying and owning process in Portugal for US citizens.
In Portugal, foreigners have the same rights as locals when it comes to buying and owning property, including land.
There is no legal distinction based on nationality. This means as a foreigner, you can own land, apartments, houses, and commercial properties just like a Portuguese citizen.
There's no requirement to reside in Portugal or hold a specific visa to purchase property. Many non-residents buy property in Portugal as an investment, vacation home, or part of a future relocation plan.
However, owning property in Portugal can be a pathway to obtaining residency, such as through the Golden Visa program, which is particularly attractive to non-EU citizens.
This program is noteworthy. It allows non-EU citizens to obtain a residency permit by making a qualifying investment, which often includes purchasing real estate.
The minimum investment amount varies, but it generally starts around 280,000 to 500,000 euros, depending on the property's location and age. The Golden Visa offers benefits like visa-free travel within the Schengen Area and a path to permanent residency and citizenship.
Generally, there's no need for specific governmental authorization to buy property. Standard procedures include dealing with land registration and tax offices for registration and payment of relevant taxes.
There's no minimum investment amount for general property purchases. You can buy property at any price point, depending on your budget and preferences.
The exception is for residency programs like the Golden Visa, where minimum thresholds apply.
It's crucial to understand the total cost of buying property in Portugal, which includes not just the purchase price but also taxes, notary fees, and legal fees.
Can you become a resident in Portugal by purchasing and owning a property?
You will become a resident in Portugal by investing in real estate through a specific scheme known as the Golden Visa program.
This program is designed to attract foreign investment and offers a path to residency for those who meet certain investment criteria.
Under this program, non-EU/EEA/Swiss citizens can obtain a residency permit in Portugal by making a qualifying real estate investment. The beauty of this program is that it doesn't require you to live in Portugal, although you have the right to do so if you choose.
The minimal investment for real estate varies. Generally, it's around 500,000 euros for most properties.
However, if you buy real estate in a low-density population area or in a property over 30 years old that requires renovation, the minimum can be reduced to 350,000 euros or even 280,000 euros in certain cases.
The process typically involves selecting and purchasing qualifying property in Portugal. Once you've done this, you can apply for the Golden Visa by submitting the necessary documents, such as proof of investment, a clean criminal record, and health insurance. The application is usually processed within a few months.
Initially, the Golden Visa is valid for two years and can then be renewed for successive periods of two years, provided the investment is maintained.
You are required to spend a minimum of seven days in Portugal during the first year, and 14 days in subsequent two-year periods.
After five years of holding the Golden Visa, you can apply for permanent residency in Portugal. Furthermore, after six years, you're eligible to apply for Portuguese citizenship, provided you meet other requirements like language proficiency.
Gaining citizenship also grants you the benefits of an EU citizen, including the freedom to live, work, and travel within the EU.
The Golden Visa program has been quite popular, attracting thousands of investors from around the world, particularly from countries like China, Brazil, Turkey, South Africa, and Russia. It's been a significant boost to the Portuguese real estate market and economy.
They can guide you through the process, help select eligible properties, and ensure all legal requirements are met for a successful application.
While the program offers a clear path to residency and potential citizenship, it requires a significant financial commitment and adherence to specific rules and timelines.
Thinking of buying real estate in Portugal?
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Market metrics
By examining the GDP per capita indicator, we can deduct that Portuguese people have become 31.3% richer throughout the past 5 years.
When people have more money, they tend to buy more real estate, and that can make prices increase in the future.
Looking at the data reported by Numbeo, we can see that rental properties in Portugal offer gross rental yields between 4.2% and 6.9%.
Such advantageous for foreign investors, as they can generate a steady stream of income and potentially achieve a quick return on investment.
To know more, you can also read our dedicated article: is it a good time to buy a property in Portugal?
How much does it cost to buy a property in Portugal?
There is not a single answer to this question. Here are some examples of property prices in different cities.
Also, you have to know that, in Portugal, the additional taxes and fees can amount to approximately 5% to 10% of the total property investment.
Lisbon
For an apartment in the city center of Lisbon, prices usually range from €4,000 to €8,000 per square meter.
For a 100 square meter apartment (2-bedroom), the cost would be between €400,000 and €800,000.
In the outskirts of Lisbon, property prices range from €2,500 to €5,000 per square meter. For a 200 square meter villa, the cost would then be between €500,000 and €1,000,000.
Porto
In the center of Porto, prices can range from €3,000 to €6,000 per square meter. For a 80 square meter apartment, the cost would be between €240,000 and €480,000.
If you're looking for a townhouse in the suburbs, then prices would go from €2,000 to €4,000 per square meter.
For a 150 square meter townhouse in Porto, the cost would range between €300,000 and €600,000.
Faro (Algarve Coast)
In the Algarve coast, you can find apartments near the beach with prices ranging from €2,500 to €5,000 per square meter.
For a 90 square meter apartment in Faro, the cost could be between €225,000 and €450,000.
You could also aim for a detached house with a garden (€2,000 to €4,500 per square meter). For a 200 square meter house, the cost could go from €400,000 to €900,000.
Portalegre
Portalegre, located in the Alentejo region, stands out as an inexpensive location to purchase property in Portugal.
There, you can find houses in the city center with prices ranging from €800 to €1,200 per square meter.
Then, for a 200 square meter house in Portalegre, the cost could be between €160,000 and €240,000.
The life as an expat
Living as an expat in Portugal is a wonderful experience that offers a mix of cultural richness and natural beauty.
Picture yourself wandering through the charming streets of Lisbon, where you'll encounter a blend of traditional and contemporary architecture, and hear the occasional notes of fado music drifting from a local tavern.
On weekends, take advantage of Portugal's stunning coastline and head to the picturesque beaches of the Algarve. You can feel the warmth of the sand between your toes as you relax under the sun, enjoying the tranquil atmosphere and perhaps treating yourself to a plate of freshly grilled sardines from a nearby beachside restaurant.
Beyond the coast, Portugal's landscapes offer breathtaking sights.
You may want to explore the lush greenery of Madeira, where enchanting levada trails lead you to captivating waterfalls and terraced vineyards, providing a peaceful retreat for nature lovers.
There are also beautiful places, such as Évora, a city steeped in heritage. There, you can marvel at the well-preserved Roman temple and experience the unique atmosphere of the Chapel of Bones, where the somber reminder of human mortality is presented in an intriguing and thought-provoking manner.
We also have to mention the flavors of Portuguese cuisine as you sample the renowned pastéis de nata, delicious custard tarts that melt in your mouth, and savor traditional dishes like cozido à portuguesa, a hearty meat and vegetable stew that embodies the country's culinary traditions.
But it's not just the attractions that make Portugal special; it's also the warmth and friendliness of the people.
As an expat, you'll find that the Portuguese are generally welcoming and eager to share their culture and way of life.
What are the best places to buy real estate in Portugal?
Of course, we have to start with Lisbon, the vibrant capital city of Portugal with a rich history, diverse culture, and strong real estate market offering a mix of modern apartments and historic properties.
There is Porto, a picturesque city known for its stunning architecture, thriving food and wine scene, and a growing real estate market popular among investors and expats.
Lots of people go for Faro, Portugal's southernmost region featuring beautiful beaches, golf resorts, and a Mediterranean climate, making it an attractive location for holiday homes and retirement living.
Another one. Home to one of Europe's oldest universities, Coimbra offers a vibrant student culture, historic charm, and affordable real estate options, making it a desirable location for investors and students alike.
We have to mention Évora, a charming town in the Alentejo region known for its well-preserved medieval streets, ancient landmarks, and a tranquil atmosphere, providing a unique real estate experience for those seeking a slower pace of life.
Another historic city with a rich architectural heritage is Braga. There is a vibrant cultural scene, and affordable real estate options, attracting both local and international buyers.
We will conclude with Aveiro. Often referred to as the "Venice of Portugal" due to its canals and colorful Moliceiro boats, this coastal city offers a mix of traditional and modern properties, ideal for those seeking a relaxed coastal lifestyle.
This table summarizes some of the best places to buy a property in Portugal.
| City / Region | Population | Average Price per sqm (EUR) | Strengths |
|---|---|---|---|
| Lisbon | ≈ 505,000 | 2,500 - 6,000 | Cultural capital, historic architecture, vibrant nightlife |
| Porto | ≈ 215,000 | 1,500 - 4,000 | Port wine, charming riverside, artistic vibe |
| Faro | ≈ 65,000 | 1,500 - 3,500 | Algarve region, beaches, golf courses, expat community |
| Coimbra | ≈ 145,000 | 1,200 - 3,000 | University town, medieval charm, cultural heritage |
| Évora | ≈ 56,000 | 1,000 - 2,500 | Historic city, Roman ruins, wine production |
| Braga | ≈ 195,000 | 1,000 - 2,500 | Religious heritage, Baroque architecture, festivals |
| Aveiro | ≈ 80,000 | 1,500 - 3,000 | Canals, colorful Moliceiro boats, seafood |
Want to explore this further?
- Is it worth it buying property in Faro?
- Is it worth it buying property in Lisbon?
- Is it worth it buying property in Porto?
- Is it worth it buying property in Lagos (Portugal)?
- Is it worth it buying property in the Algarve?
- Is it worth it buying property in the Alentejo?
Do you need a lawyer when buying a property in Portugal?
When you purchase a property in Portugal, a local lawyer can be instrumental in guiding you through the legal process and ensuring that everything is done correctly.
For instance, they can help you draft a Promissory Contract, which is a legally binding document between the buyer and seller that outlines the terms of the sale.
The Portuguese lawyer can also assist with the proper notarization and registration of the property transaction, ensuring that the transfer of ownership is officially recognized.
In addition, the lawyer can help you navigate the process of obtaining a Residence Permit or Golden Visa for non-EU buyers. This is a document that grants residency rights in Portugal to buyers who invest in Portuguese real estate.
They will ensure that all applicable taxes and fees related to the purchase are paid accurately and in compliance with Portuguese laws. Additionally, the lawyer can provide comprehensive knowledge of Portuguese property laws and regulations, ensuring that the entire process is conducted within legal frameworks.
Is a notary useful when buying a property in Portugal?
Certainly! A notary is an invaluable resource when it comes to purchasing a property in Portugal.
A notary acts as a go-between, which sets them apart from an independent solicitor.
Their expertise and role are instrumental in ensuring a smooth and legally sound transaction.
Here are two directories where you can find them: Notaries Europe and the European Directory of Notaries.
The primary function of a notary in Portugal is to meticulously verify and authenticate the various legal documents involved in the property purchase. This includes conducting a comprehensive examination of the property's legal status, such as confirming ownership details and uncovering any existing encumbrances or liens.
By doing so, the notary ensures that the property is free from legal complications and that the seller possesses the legal right to transfer ownership.
Basically, they verify the property information by consulting both the Land Registry (Conservatória de Registo Predial) and the Inland Revenue (Repartição de Finanças).
Moreover, the notary takes on the responsibility of preparing and overseeing the signing of the purchase agreement.
This vital document outlines the terms and conditions of the transaction and must comply with all applicable laws and regulations.
The notary's impartial role ensures that both the buyer and seller fully comprehend the agreement and that it accurately reflects their intentions.
Once the agreement is signed, the notary finalizes the process by registering the property transfer with the Land Registry, providing an official record of the transaction's completion.
What are the risks when buying a property in Portugal?
We've got an article dedicated to the risks associated with purchasing property in Portugal.
1. Agent Properly Registered
Before anything, you have toverify that your selected realtor is properly registered.
All agents must be registered with the Associação de Mediadores Imobiliários, and they should have a valid license number.
You can verify your agent's credentials by contacting the Instituto da Construção e do Imobiliário, the organization responsible for overseeing construction and real estate matters.
2. Solicitadors vs Advogados
In Portugal, a solicitador and an advogado (lawyer) are two different legal professionals with distinct roles.
A solicitador specializes in providing legal and administrative services, including tasks related to property transactions such as contract drafting, property registration, title searches, and tax matters.
They have the authority to represent clients in court for certain legal matters.
On the other hand, an advogado is a qualified lawyer who can provide comprehensive legal advice and representation in all types of legal proceedings, including complex litigation.
They can handle due diligence, negotiation, contract drafting, and dispute resolution in property transactions.
When buying a property in Portugal, the choice between a solicitador and an advogado depends on the complexity of the transaction and the specific needs of the buyer.
For straightforward property purchases without significant legal complications, a solicitador may be sufficient. They have expertise in routine legal tasks related to property transactions.
However, if the transaction involves complex legal issues, potential disputes, or the buyer desires comprehensive legal advice and representation, an advogado is recommended. They possess broader legal knowledge and experience to handle intricate matters.
3. Golden Visa Program Changes
We mentioned that before. You can also read our dedicated (and frequently updated) article.
Portugal offers a Golden Visa program that allows non-EU citizens to obtain residency or citizenship by investing in Portuguese properties.
You might want to use that program and gain residency through your real estate investment.
However, be aware of potential changes or updates to the program's requirements and conditions.
Stay informed about any policy changes or amendments that may impact your eligibility or the program's benefits.
4. Local Property Market Fluctuations
Portugal's property market experiences fluctuations in supply, demand, and pricing across different regions.
Research and understand the local property market conditions in the specific area where you intend to buy.
Factors such as market trends, property appreciation rates, and rental demand can influence the long-term viability of your investment.
5. Building and Renovation Regulations
When purchasing properties in Portugal, be aware of building and renovation regulations.
Ensure that you comply with all necessary permits, zoning restrictions, and construction codes.
Renovations may require special authorization or adherence to specific guidelines, particularly for properties located in historic areas or protected zones.
Also, getting a survey done on an old property before purchasing it is a smart move, even though it may not be legally required.
This is especially important for older houses, as they may have hidden issues that could be expensive to repair. Your solicitor can assist you in finding a registered surveyor.
6. Portuguese Tax System
Understand the Portuguese tax system and its implications for property ownership.
This includes property transfer taxes, annual property taxes (IMI), capital gains taxes, and potential taxes on rental income.
Consult with tax professionals familiar with Portuguese tax laws to ensure compliance and effectively manage your tax obligations.
7. Local Real Estate Practices and Negotiations
Portugal has its own real estate practices and negotiation customs.
It's advisable to engage with local real estate agents who possess expertise in the specific region where you plan to buy.
They can provide insights into local practices, market dynamics, and help navigate negotiations more effectively.
8. Cultural and Language Differences
Moving to Portugal involves adapting to a new culture and potentially a different language if you are not already fluent in Portuguese.
Familiarize yourself with the local customs, laws, and social norms to facilitate a smoother transition and avoid misunderstandings or potential conflicts in the future.
What are the required documents for a real estate transaction in Portugal?
When buying a property in Portugal, the documents required are:
- Identity documents (passport or ID card)
- Tax Identification Number (NIF), which you can obtain by visiting the nearest Loja do Cidadão (Citizen's Shop)
- The energy certificate for your new property
- The Imposto de Selo (stamp duty) document
- The Caderneta Predial (land register) document
- Your mortgage agreement
What are the key steps to develop a successful negotiation plan with Portuguese people?
When negotiating to purchase a property in Portugal, it is important to understand and appreciate Portuguese culture, which is deeply rooted in history, tradition, and warm hospitality.
Portuguese people value personal relationships and tend to prioritize trust and rapport in business dealings. It is recommended to approach negotiations with a friendly and respectful attitude, taking the time to establish a connection with the seller.
Honesty and transparency are highly regarded in Portuguese culture. It is important to be forthright and clear about your intentions, expectations, and terms of the sale. Open communication and a direct approach are generally appreciated.
Patience is key during negotiations in Portugal. The decision-making process may take time, and it is important to show understanding and flexibility. Demonstrating patience and a willingness to engage in thoughtful discussions can help build trust and lead to successful outcomes.
Furthermore, familiarizing yourself with the local real estate market and legal procedures is essential. Conduct thorough research on property laws, regulations, and any associated costs such as taxes, fees, and maintenance expenses. This knowledge will empower you during negotiations and ensure a smooth transaction.
Lastly, embracing Portuguese culture and customs can create a positive impression. Showing an interest in the country's history, cuisine, and traditions can help foster a harmonious relationship with the seller and enhance your overall experience of buying a property in Portugal.
Are mortgages available to foreign nationals in Portugal?
Yes, foreigners can obtain property loans in Portugal (however, it's not the case if you're investing to qualify for a Golden Visa).
The Portuguese banking system allows non-residents to apply for property loans, subject to certain conditions and requirements.
Please note that if you are a foreigner, Portuguese banks typically do not provide full financing for purchasing a property. The loan amount offered will usually be a maximum of 70% of the property's purchase price. A deposit of around 20-30% is recommended.
To secure a property loan in Portugal as a foreigner, you may explore the Golden Visa program, which offers residency to real estate investors, and leverage the Non-Habitual Resident (NHR) tax regime.
Some banks in Portugal that can grant mortgages to foreigners include Millennium BCP, Caixa Geral de Depósitos (CGD), and Novo Banco. As mentioned before, if you open a bank account, you automatically get a fiscal number (Numero de Contribuinte), which is necessary to buy real estate.
Furthermore, in Portugal, mortgage rates for a 20-year term range between 0% and 4%, presenting borrowers with favorable conditions for securing financing.
Mortgage-related fees may consist of the following:
- Deed registration: 1%
- Mortgage arrangement: 1%
- Mortgage administration: 1%
- Non-refundable commitment fee: approximately €600
- Survey and appraisal: €500–€800
Finally, as mentioned before, if you plan to get a mortgage, you should aim to get your mortgage agreement as soon as possible. It will help you determine your budget.
What are the taxes related to a property transaction in Portugal?
Here is a breakdown of taxes related to a property transaction in Portugal.
Please note that, if the property you are purchasing will be your primary residence, you are exempt from paying the property transfer tax (IMT) on the first €92,407 of the purchase price. It's nice because this is usually the most important tax.
| Tax | Description | Calculation | Who pays |
|---|---|---|---|
| Value Added Tax (VAT) | A tax on the sale of newly constructed properties | A flat rate of 23% of the property value | Buyer |
| Wealth Tax (AIMI) | Annual tax on the net worth of individuals | 0.7% for property over 600,000 euros and 1% for property over 1 million euros | Owner |
| Rental Income Tax | Tax on rental income generated from the property | A flat rate of 15% on the net rental income | Owner |
| Property Transfer Tax (IMT) | Tax on the transfer of property ownership | 0% to 8% of the property purchase price, depending on the property value and location | Buyer |
| Stamp Duty (IS) | Tax on various legal and administrative documents | A fixed rate of 0.8% of the property's registered fiscal value | Buyer |
| Capital Gains Tax | Tax on the capital gain from the sale of a property | 25% or 28% on the net capital gains (difference between sale and cost prices) | Seller |
| Property Tax (IMI) | Annual tax on the property's taxable value paid to the municipality | From 0.3% to 0.8% of the cadastral value of the property | Owner |
What fees are involved in a property transaction Portugal?
Below is a simple breakdown of fees for a property transaction in Portugal.
| Fee | Description | Calculation | Who pays |
|---|---|---|---|
| Legal Fee | Legal fees for assistance in the property transfer | Ranges from 1% to 2% of the property value | Buyer |
| Registration Fee | Fee for registering the property transfer | Varies between 0.50% and 1.20% of the property value | Buyer |
| Real Estate Agent Commission | Fee charged by real estate agents for their services | 3% to 6% of the property purchase price or a fixed fee agreed upon with the agent | Seller |
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