Buying Property in Portugal: Everything You Need to Know
To buy property in Portugal, you need to obtain a NIF, present proof of identity and address, sign a Promissory Purchase and Sale Agreement (Contrato Promessa de Compra e Venda) with a deposit of 10% to 20%, and execute the deed (Escritura) within 90 days. The transaction involves paying taxes and fees such as IMT (or VAT), Stamp Duty (0.8%), AIMI (0.7% above €600,000), notary fees, and land registry fees.
Portugal is attracting significant attention from international buyers seeking second homes. Thanks to its fine weather, excellent quality of life and tax advantages, it is essential to know what to consider before moving forward with real estate investments.
However, navigating a foreign real estate system can be complex. You should be fully prepared for all the taxes and costs you will incur. This guide will help you understand what to expect when planning to buy property in Portugal, alongside tools such as CASAFARI Property Sourcing.
Do not forget to consult our featured area guide to explore Portugal’s cities, regions and neighbourhoods.
In recent years, the government introduced attractive measures for foreign investors looking to buy property in Portugal. Non-Habitual Resident (NHR) status has been available to EU citizens, while non-EU nationals could qualify for the “Golden Visa” scheme, which granted a five-year residency permit for real estate investments exceeding €500,000.
What documents and contracts are required to buy property in Portugal?
Before buying property in Portugal, ensure your identification documents are in order. You will need to obtain a tax identification number, known as a número de contribuinte or NIF, which can be acquired at a local tax office (Finanças).
Other documents you will require include proof of address and proof of identity, such as a national identity card or passport.
Purchase agreement (Contrato Promessa de Compra e Venda)
The Promissory Agreement (Contrato Promessa) is a legally binding contract signed by the buyer and the seller, committing both parties to complete the property transaction. The contract must identify the buyer and seller, the agreed price, payment terms, and clearly outline the full inventory and assets included in the sale.
At this stage, you will typically need to pay a deposit (referred to in Portuguese as a sinal) representing 10–20% of the total purchase price. If you fail to complete the transaction within the agreed timeframe, you forfeit this deposit. Likewise, if the seller defaults on the agreement, they must return double the amount of your deposit.
Transaction deed (Escritura de Compra e Venda)
The deed of purchase and sale (Escritura de Compra e Venda) is usually signed within ninety days of the Promissory Agreement taking effect, effectively closing the property transaction. The deed can be signed by you and the seller in person or by your legal representatives acting under power of attorney.
The deed must be signed before a Portuguese notary, who will verify all documents associated with the process. Following this, your solicitor or lawyer will register the property at the Land Registry (Conservatória do Registo Predial).
What are the transaction costs and taxes when buying property in Portugal?
The various costs and taxes you should be aware of when buying property in Portugal include:
- Purchase price
- Property Transfer Tax (IMT) or VAT
- Stamp Duty
- Wealth tax (AIMI)
- Notary fees
- Deed registration fee
- Legal fees (optional)
- Utility connection charges
- Surveyor fees (optional)
Purchase price
First, the buyer and seller agree on the acquisition price to be paid for the property. To assess market values accurately, you can rely on CASAFARI Comparables & Market Analytics. This agreed price is formalised in writing within the Promissory Agreement and the final deed.
Property Transfer Tax (IMT)
IMT (Imposto Municipal sobre as Transmissões Onerosas de Imóveis), or Property Transfer Tax, is payable whenever property ownership is transferred from one party to another (for newly constructed properties, VAT applies instead). It must be paid by you (or your legal representative) before signing the deed at a local tax office. You will be required to present proof of payment to the notary.
IMT is calculated as follows:
IMT = Agreed Property Price OR Rateable Value / Taxable Value (whichever is higher) x Applicable Rate – Deductible Amount
Online calculators are available, or you can consult your legal professional to determine the exact amount due.
Stamp Duty
Stamp Duty (Imposto de Selo) is a levy on contracts, legal documents and deeds involved in a property transaction, payable alongside IMT and notary charges.
Stamp duty is calculated as follows:
Stamp Duty = Agreed Property Price or Rateable Value (whichever is higher) x 0.8%
Example:
A property valued at €500,000.
€500,000 x 0.8% = €4,000
The Stamp Duty payable is €4,000.
Wealth tax (Adicional ao Imposto Municipal Sobre Imóveis)
Wealth tax (AIMI) applies to individuals holding an aggregate stake in Portuguese residential real estate valued at over €600,000, regardless of tax residency status. Introduced in 2017, the standard tax rate is currently 0.7%.
For joint owners, the tax-free threshold doubles to a combined €1.2 million, which can be advantageous for international investors.
Notary fees
The notary acts as an independent professional whom buyers are legally required to engage to oversee the sale. You will pay notary fees to verify your documentation and witness the signing of the deed. Notaries typically charge between 1% and 3% of the purchase price.
Deed registration fee
The deed registration fee is paid to the notary upon official approval of all property documentation.
Legal fees (optional)
Engaging legal representation to guide you and act on your behalf throughout the acquisition is highly beneficial, particularly if you lack time or prefer working with a specialist familiar with the local system.
If you choose to hire a lawyer or legal representative, their fees should be factored in. Legal fees in Portugal generally range between 1% and 2% of the purchase price plus VAT.
Utility connection charges
If purchasing a new-build property, setting up connections for electricity, gas, water and telecoms will incur extra costs. If purchasing a resale property, ensure all utility contracts are transferred into your name.
Surveyor fees (optional)
While not legally mandatory, hiring a qualified Chartered Surveyor is strongly advised when buying property in Portugal. You can instruct them to undertake a valuation, a homebuyer survey, or a comprehensive structural survey.
Many older Portuguese properties are prone to structural or maintenance issues, while some recent developments may have suffered quality shortcuts during economic downswings. An independent inspection provides valuable peace of mind.
It is best to arrange a property survey prior to signing the Promissory Agreement, giving you the flexibility to renegotiate or withdraw if unfavorable issues are identified.
The cost of a full survey is relatively modest in Portugal. The Royal Institution of Chartered Surveyors (RICS) operates in Portugal and can assist in locating accredited professionals. Ensure any surveyor engaged possesses thorough knowledge of Portuguese building standards.
Budgeting between 8% and 10% of the purchase price is recommended to cover all associated transaction taxes and professional fees.
For foreign buyers, acquiring property in Portugal may initially seem challenging. However, ensuring your paperwork is in order will prevent unexpected surprises.
Remember to keep all property documentation safe! These documents will be required should you decide to sell or let your property in the future.
Also read on our blog: 6 reasons why you should invest in property in Portugal.
Frequently asked questions
Which documents are mandatory for buying property in Portugal?
To purchase property in Portugal, the buyer must obtain a tax identification number (NIF) from a local tax office (Finanças). In addition to the NIF, valid proof of identity (such as a passport or national ID card) and updated proof of residence are legally required.
What is the difference between the Contrato Promessa de Compra e Venda and the Escritura?
The Contrato Promessa de Compra e Venda (Promissory Purchase Agreement) is a legally binding agreement committing both buyer and seller to complete the transaction, typically requiring a 10% to 20% deposit. The Escritura de Compra e Venda (Deed of Purchase and Sale) is the official deed executed before a notary within 90 days to close the transaction, after which the property is registered at the Land Registry.
How are IMT and Stamp Duty calculated when buying a home in Portugal?
Both taxes are calculated on the higher figure between the agreed purchase price and the property’s rateable value (Valor Patrimonial Tributário). IMT applies the relevant tax rate minus a deductible allowance and is paid prior to executing the deed (or replaced by VAT for new developments). Stamp Duty is charged at a flat rate of 0.8% on the calculated value.
Who has to pay the Additional Municipal Property Tax (AIMI)?
AIMI is payable by property owners holding residential real estate in Portugal with an aggregate taxable value exceeding €600,000. This rule applies regardless of whether the owner is a tax resident in Portugal, at a base rate of 0.7%. For joint owners, the exemption threshold increases to a combined total of €1.2 million.
How do professionals and investors search for and evaluate properties in Portugal using CASAFARI?
Professionals and investors use Property Sourcing and Comparables & Market Analytics from CASAFARI to analyse property listings and comparable market data nationwide. These solutions provide access to comprehensive real-time market data directly on the CASAFARI platform.