Guide to Buying a House in Portugal
Many foreigners choose to buy a house in Portugal for vacations or residency, attracted by the quality of life, proximity to Europe, mild climate, gastronomy, and tax benefits.
Have a Representative and Advisor
If you have never lived in Portugal, it’s advisable to have a lawyer to represent and advise you during the purchase process. A specialist can inform you about the necessary documents, legal procedures, and costs.
Necessary Documentation
- Tax Identification Number (NIF): Required for any real estate transaction. Can be obtained through a fiscal representative.
- Portuguese Bank Account: To facilitate transactions. Opening a bank account is simple, requiring only an ID, proof of address, and a NIF.
- Power of Attorney: If you cannot be present during the process stages.
Obtain the NIF
You need a NIF to buy a house in Portugal. This can be obtained at the Tax and Customs Authority (AT) offices or Citizen Shops. EU citizens need only a civil ID; others need a passport. If you don’t have residency in Portugal, you must appoint a fiscal representative, such as a lawyer.
Find Your Dream Home
Decide the type of home you want and the amount you plan to invest. Consider the location, which affects house prices and property taxes (IMI and AIMI).
Research House Prices
House prices vary by region. Lisbon has the highest median housing price in Portugal at €4,151/m². Other notable areas include Cascais, Oeiras, Porto, and Algarve municipalities like Loulé and Albufeira.
Formalize the Purchase
Once you’ve found your dream home, sign a promissory contract and pay a deposit. This formalizes the agreement and conditions. If the seller withdraws, you receive double the deposit. If you withdraw, you lose the deposit.
Gather Necessary Documents
- Property Registration Certificate
- Property Tax Information from the Finance Service or Finance Portal
- Municipal Master Plan (PDM)
- Usage License
Sign the Deed
The deed marks the final step, making you the official homeowner. At this stage, you’ll pay the Property Transfer Tax (IMT). Then, you can move into your new home in Portugal.
Non-Habitual Resident (NHR)
Portugal offers a favorable tax regime for NHRs, with a 20% flat IRS rate and double taxation exemption on pensions for ten years. Note: This benefit ends in 2024, per the State Budget for 2024.
Taxes Associated with Buying Property
- IMT (Property Transfer Tax): Paid before the deed (variable rate).
- Stamp Duty: 0.8% on the purchase value and 0.6% on the loan amount.
- IMI (Municipal Property Tax): Annual tax based on property value (0.3%-0.8%).
Purchase Process
- Search and Select Property
- Property Visits
- Offer and Negotiations
- Reservation
- Promissory Contract (CPCV)
- Legal Checks and Due Diligence
- Tax Payments
- Public Deed
- Property Registration
Financing Options
Financing can make buying property in Portugal more accessible. Options include:
- Mortgages: Common for property purchases.
- Housing Credit: Specific type of mortgage for home purchase.
- Private Investors or Real Estate Credit Companies
Steps for Financing
- Property Appraisal
- Credit Analysis
- Compare Rates and Conditions
- Required Documentation
- Loan Approval and Disbursement
- Mandatory Life and Home Insurance
Consulting a financial advisor or mortgage broker can be beneficial for navigating the financing process.
Golden Visa Program
The Golden Visa is attractive for foreign investors seeking residency or investment in Portugal. Although property purchases no longer qualify, investing €500,000 in eligible funds can still grant residency and potentially citizenship after five years. The program offers EU residency benefits, including free movement within the Schengen Area.
Non-Habitual Resident Program
The NHR program provides favorable tax conditions for new tax residents for ten years. Note: This program ends in 2024.
Portugal’s beautiful landscapes, mild climate, and investment opportunities attract many foreigners. Understanding the buying process and associated benefits can ensure a smooth and successful property acquisition