Buying a House in Portugal

Buying a house in Portugal can cause unique problems for the uninformed property buyer as Property Law in Portugal has varied idiosyncrasies.

Buying a House in Portugal

Whether you are an investor looking for a good deal or a non-resident individual looking to buy a house in Portugal, there are many good reasons to do so, however, there are also many pitfalls that you need to be careful of. Below you will find a general overview of the correct steps to take, while we provide more details on specific issues you need to pay attention to in other articles.

Choose a good real estate agent

If buying a house in Portugal is challenging, then doing so without the support of a real estate agent is an even greater challenge. Having a good real estate agent, who knows the area where you intend to buy the house, can be a guarantee that you will not buy a pig in a poke.

Do some prior research

After chosen your dream home, it is recommended that you do some documentary research on the property before the conclusion and signing of any agreement, so that you can correctly evaluate it and minimize the risks of the process as much as possible.

It  would not be advisable to delegate this specific task to the real estate agent since their interest lies in closing the deal and may not be as transparent as you would like in this matter.

This will be the stage in which you will be able to confirm, for example, if your property is linked to a lease that no one told you about, whether the use of the parking space is exclusive to the apartment owner and if this space is included when the property is transferred, whether the garden is a common or private space, among others.

 

Sign the promissory contract

Before signing the public deed of purchase and sale, and for the purpose of linking the parties to the future transaction, it is often recommended to enter into an agreement called the promissory purchase and sale agreement, through which each party will establish the terms and the conditions for the purchase and sale, committing, under the terms of the same, to going ahead with the future business, in which the property will be transferred to the buyer.

It is at this moment that you must make the payment of a deposit (previously negotiated with the owner) that varies between 20% to 30% of the property value. ATTENTION: According to Portuguese law, there is no obligation to return the deposit in case of cancellation by the buyer, unless specific conditions are foreseen in the contract.

Know the taxes and costs to pay when buying a house in Portugal

In Portugal, the transfer of the property takes place through a Public Deed, in a Notary or Conservatory of the Land Registry, which confirm the accuracy of all documents relating to the purchase of the property and verify the settlement of the respective taxes.

The Portuguese tax system includes 3 main taxes associated with real estate: the Municipal tax on Transmissions for Sale of Properties, also known as IMT (varies between 0% to 8%, according to the acquisition value, location and purpose), the Stamp Duty (0,8% of the declared value) and the Municipal Property Tax (IMI), paid annually by the owners.

There are also additional costs associated with the property purchase process, such as notary fees, certificates, records and, in the case of contracting a mortgage, costs and commissions to be paid to the financial institution, such as, for example, property valuation, expenses opening, document handling, among others.

Documents you will need

To buy a house in Portugal, whether as a resident or non-resident, you will need to have a taxpayer number (Portuguese), also known as NIF that can be obtained from any government finance office.

As a buyer, you will need to provide proper identification. Such as a passport or a Portuguese identification card (Citizen Card). It is advisable to open an account with a Portuguese bank to avoid surprises with frequent changes in the exchange rate, however, this is not a legal requirement.

Of course, it is strongly advised to obtain independent expert legal advice throughout the process of buying a house in Portugal, and especially before signing any documents or making any payments to third parties.

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