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If you're considering purchasing a property in Portugal, there are several critical factors to consider and proper steps to be taken. In this article, we'll guide you through the essential aspects you should be aware of before making the significant decision to buy a house.

Please take note that there are some slight differences (mostly bureaucratic small ones) between buying property as a National, a European Citizen and a person from any other Country outside those conditions. Since the differences are little to none, we will approach it in a more general capacity.


Before even embarking on your property-buying journey, clearly define your objectives, this will determine what kind of financial considerations you should think about before the purchase. Are you looking for a permanent residence, a vacation home, or an investment property? Understanding your goals will help you make decisions that wont end on financial distress.

Budget & Stability
Sit down and meticulously evaluate your finances, considering your available budget and your foreseeable future financial stability (for ex. Regarding professional situation). Understand your monthly budget and determine the cost of the property you are trying to buy, accounting for expenses such as utilities, mortgages, other loan related costs, insurance, property taxes, and more.

One option for acquiring property is through bank financing, which involves a mortgage loan from various credit institutions, like banks. The Bank of Portugal offers a webpage to help compare financing options provided by these institutions.

Setting the Price & Property Valuation
In Portugal, the property's value is determined by the seller. If needed, you can request a valuation from a specialist or real estate consultant. When purchasing with credit, the bank often conducts this valuation as a requirement for loan approval.

It will be further elaborated later, but beware that property taxes in Portugal can vary depending on factors like property value, location, and the type of transaction. That’s why, it is essential for property buyers and owners to be aware of these taxes and their implications when purchasing, owning, or transferring real estate in Portugal.

The GOLDEN VISA OPPORTUNITY (due to end in 2023)
Take into consideration that many foreigners (and you too could have been thinking about it), were taking advantage of the Golden Visa government rule of 2012 while buying property in Portugal, but it is due to end in 2023. This rule was a residency by investment program that allowed foreign investors, including non-European Union (EU) citizens, to obtain Portuguese residency by making certain qualifying investments in the country.
The program was officially known as the "Residence Permit for Investment Activity" or "ARI" (Autorização de Residência para Atividade de Investimento) but it is commonly referred to as the Golden Visa due to its attractiveness to investors. Even thought the Golden Visa rule is coming to an end, you can still apply to it until the formal/legal end of the ruling.
You can qualify by (regarding your Real Estate goals):
  • Buying Real Estate - Invest €500,000 in property (€400,000 in low-density areas).
  • Older Real Estate - Spend €350,000 on properties over 30 years old or in urban renewal areas (€280,000 in low-density areas).
  • Capital Transfer - Transfer €1.5 million to Portugal.
  • Conservation - Spend €250,000 on art, culture, or heritage (€200,000 in low-density areas).
The beneficiaries of ARI / Golden Visa are entitled to:
  1. Residence visa waiver for entering Portugal;
  2. Living and working in Portugal, on condition that they stay in Portugal for a period of 7 or more days, in the first year, and 14 or more days, in the subsequent years;
  3. Visa exemption for travelling within the Schengen Area;
  4. Family reunification
  5. Applying for permanent residence (pursuant to the Aliens Act – Act number 23/2007 of 4 July with the current wording );
  6. Applying for Portuguese citizenship, by naturalization, provided all other requirements set out by the Nationality Act are fulfilled (Act number 37/81 of 3 October, as amended);
  7. From January 1, 2022, residential real estate investments in Lisbon, Porto, and the Algarve no longer qualify. Commercial real estate investments remain eligible. Keep in mind these changes and the legal end of the ruling, while considering the Golden Visa in Portugal.


Familiarize yourself with Portugal's legal framework for property ownership. Understanding the laws and regulations governing real estate transactions is crucial.
If you're considering buying or selling property, such as a house, building, or land, in Portugal, there are several legal obligations to be aware of. These include everything from the purchase and sale agreement to taxes and insurance.

Real Estate Agents & Intermediaries
You can seek professional advice from a real estate agent, solicitor, accountant, or lawyer when buying or selling property. These professionals can provide technical and legal support for navigating the Portuguese real estate market.

Legal Documentation for the Property
To initiate the property purchase process, ensure that all legal documentation is in order. This includes:
1. Property Tax Certificate: Details about the property issued by the Tax and Customs Authority.
2. Property Registry Certificate or Certificate of Contents: Information from the Property Registry office detailing the property's location and ownership.
3. Occupancy License: Issued by the local municipality, confirming that the property complies with regulations.
4. Energy Certificate: Showing the property's energy efficiency.
5. Housing Technical Datasheet: Describing the property's technical and functional features.
6. Statement of No Debts to the Condominium: Confirming no outstanding condo fees.

Obtaining a Taxpayer Identification Number (NIF)
Having a valid NIF is mandatory for tax purposes when buying or selling property. The NIF (Portuguese taxpayer number) is a fiscal and customs number that a person most request to engage in property transactions in Portugal.
Anyone, regardless of their nationality, can purchase a property, as long as they have a valid NIF number. The process is slightly more straightforward for European Union citizens due to the free movement of people and capital (as per The Schengen Agreement).
Obtaining a NIF in Portugal is free of charge and can be requested by both residents and non-residents. For foreign citizens, a valid passport is required. In the case of European Union citizens, they can also provide a civil identification document from their respective EU country.
If you are a non-European Union citizen and do not reside in Portugal, you have the option to appoint a local fiscal representative to act on your behalf with Portuguese tax authorities. This process is similar to the one available to foreigners who wish to establish a company in Portugal.

Purchase & Sale Agreement
While not mandatory, you can sign a purchase and sale agreement. This document, authenticated by both buyer and seller, outlines the rights and obligations of each party. It should include details like names, civil status, identification numbers, property information, purchase price, payment terms, and penalties for non-compliance.

When purchasing a property encased on any kind of condominium format plausible by Portuguese law, it's mandatory to subscribe to insurance covering risks such as fire, floods, theft, and other damages. This insurance encompass common areas. The cost of this insurance is typically managed by including it in your monthly condominium fees.
Insurance will be mandatory in the case of purchasing a property through housing credit financing, financial institutions typically require two types of insurance: life insurance and multi-risk insurance. The property itself is used as collateral for the loan.
Finally, tt's crucial to carefully consider the following factors when contracting insurance: Coverage, Exclusions, Deductibles (if applicable), Insured Amount, Premium Amount.

Costs & Taxes on Property (Including Buying and Selling)
Property ownership, purchase, and sale involve costs, with tax components playing a significant role. Taxes applicable to property transactions in Portugal include:
1. IMI– Imposto Municipal sobre Imóveis (Municipal Property Tax)
IMI applies to both urban and rural properties. It is a direct tax that applies solely to property and landowners. It assesses the value of these properties. In technical terms, it is based on the Taxable Asset Value (VPT), which is the property's assessed value registered with the Tax Authority. The property tax itself, or more precisely, the rate to be paid, is defined annually by the municipalities where the respective properties are located. These rates, in turn, are determined based on a table issued by the State to regulate the values ​​practiced, imposing limits on the rates. Exemptions from IMI are available in specific cases defined by law.
2. IMT– Imposto Municipal sobre as Transmissões Onerosas de Imóveis (Municipal Property Transfer Tax)
IMT is a municipal tax that applies to onerous property transfers in Portugal. It is paid to the State whenever there is a financial transaction for the purchase and sale of a property in Portuguese territory.
In most cases, this tax applies to the higher of the two values: either the notarized acquisition cost or the tax asset value of each property. Stamp duty is also levied on such transactions.
The acquisition of over 75% of the share capital of a limited liability company (or a private subscription closed-end real estate investment fund) that owns one or more properties in Portugal also triggers IMT. Exemptions from IMT are available in specific cases defined by law.
3. IS – Imposto do Selo (Stamp Duty)
Stamp Duty, also known as Imposto do Selo, is levied on various acts, including property purchases with a mortgage loan.
When buying a house, typically financed with a mortgage loan, this tax is payable twice: when the property is registered and when the loan amount is credited to the current account.
4. AIMI — Adicional ao Imposto Municipal sobre Imóveis (Additional Municipal Property Tax)
Introduced in 2017, AIMI is an additional tax levied on real estate properties. It is based on the patrimonial values (Valores Patrimoniais Tributários or VPT) of urban housing and construction land listed in the property's land registry. AIMI is related to the Municipal Property Tax (IMI) in Portugal and applies to urban residential buildings and construction land.
5. IRS (Income Tax) for Foreigners Residing in Portugal
Foreigners residing in Portugal are subject to Income Tax. To be liable, they must be residents for at least 183 days (consecutively or not) during one fiscal year, from January 1st to December 31st.

Completing the Transaction
To finalize a property transaction, you'll need to go through an official deed-signing process, where the buyer legally becomes the property owner. This can be done at a Notary Office, through a lawyer, or at a Single Counter at the Land Registry.
The necessary documentation includes:
- Identification documents of all parties involved.
- Certificate of content from the Property Registry.
- Property tax certificate or property registration request (IMI Model I) from the Tax and Customs Authority.
- Occupancy license (if the property was constructed after August 1951).
- Housing technical datasheet (if the occupancy license was issued after March 30, 2004).
- Infrastructure certificate (for registered subdivision permits since 1992 without providing a deposit).
- Energy and Indoor Air Quality Certificate.
- Proof of payment of IMT and Stamp Duty.
- Declarations of the exercise of the right of preference (if applicable).
- Toponymic certificate (if applicable).
- Declaration of outstanding loan amounts for settlement purposes (if applicable).
- Purchase and sale agreement.
- Declaration of IMI settlement (Municipal Property Tax).

Deed Costs
For the deed signing, there are costs associated with public taxes:
- Stamp Duty on the transaction: 0.8%
- Stamp Duty on credit (if applicable, and above €5,000): 0.6%

After the public deed is signed, the property's acquisition must be registered at the Land Registry.

In conclusion, buying property in Portugal it is not an impossible endeavor, yet it includes a lengthily process with financial, legal, and administrative considerations that can seem daunting to a foreigner. Seeking professional guidance and staying informed about the latest regulations can help ensure a smooth and successful property acquisition, even more so when language barriers and local customs and traditions can be a motive for misunderstandings.

Related Articles:
Dreaming of Rehabilitating an Old Farmhouse in Portugal? Understanding the Pre-1951 Rule Everyone Talks About. (urbamarkt.com)
Moving to Portugal: Researching and Choosing Your Specific Destination (urbamarkt.com)
Welcome to Portugal (urbamarkt.com)

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Marisol Ferreira