The Portuguese property purchasing process is straightforward and offers good protection for both buyers and sellers.
Extra Costs to Consider: You should allow 3-10% on top of the purchase price to cover things like:
- Purchase Tax (IMT): A sliding scale from 0% to 6% of the declared value for permanent residences, or a flat 6% for other properties.
- Notary Charges
- Stamp Duty
- Legal Charges: Usually around €700-1,000. Confirm your lawyer’s fees before instructing them.
Fiscal Number (Número Fiscal de Contribuinte)
To purchase property in Portugal, you will need a Fiscal Number (Número Fiscal de Contribuinte). Applying is simple and you’ll get your number immediately. The cost is approximately €5.
Visit your local tax office (Repartição de Finanças) with proof of identity (residency card, identity card, or passport), and an address in Portugal (can be your lawyer’s or agent’s address). Notify the tax office if you change your address. Most towns have a tax office.
Promissory Contract (Promessa de Compra e Venda)
After your offer is accepted, you’ll sign a Promissory Contract with the owner. This contract states that you will buy the property, and the seller agrees to sell it. You typically pay a 10% deposit, and a date for completion (usually within 2-6 months) is agreed upon. You may also specify conditions such as completion of building work.
If you fail to complete, you lose your deposit. If the seller doesn’t complete, they must return double the deposit. It’s not mandatory, but we recommend having a solicitor draw up the contract.
Note: Always hire an independent lawyer for legal advice. Pure Portugal does not offer legal services.
Necessary Documents:
- Certidão de Teor: Confirms if there are any outstanding mortgages or if the property is registered under the owner’s name.
- Caderneta Predial: From the Fiscal Department (Finanças), details the property’s size, location, boundaries, and a description. Land may also include a plot drawing.
- Tax Department Confirmation: Verifies all tax bills (IMI) are paid. Unpaid IMI taxes transfer to the new owner.
- Proof of Payment of IMT: Payment receipt.
- Ficha Técnica de Habitação: Required for properties built or altered after 31 December 2003.
- Identification and Tax Numbers: Of both the buyer and seller.
- Power of Attorney: If the buyer or seller cannot be present at the signing.
If the seller is a company, you may also need:
- Certidão Comercial: Identifies the partners of the company.
- Power of Attorney: From any other partners if applicable.
Neighbours’ Right to Buy (Exercício de Direito de Preferência)
When selling a rustic (prédio rústico) or mixed (prédio misto) property, the seller must inform neighbours via registered letter. They must wait 8 days for a response, allowing neighbours the chance to purchase the property. If multiple neighbours are interested, it could go to auction.
Ensure this process is followed—your lawyer should verify it before proceeding.
Purchase Tax (IMT)
You must pay IMT before completing the sale. Proof of payment must be shown to the notary.
IMT Scales: For land only (prédio rústico): 5%. For construction/urban properties: 6.5%. For mixed properties: The rustic part is taxed at 5%, and the urban part follows standard rates.
IMT on Other Properties (sliding scale based on property value):
For Permanent Residences:
- Up to €92,407: 0%
- €92,407 – €126,403: 2%
- €126,403 – €172,348: 5%
- €172,348 – €287,213: 7%
- €287,213 – €574,323: 8%
- Over €574,323: 6%
For Non-Permanent Occupation:
- Up to €92,407: 1%
- €92,407 – €126,403: 2%
- €126,403 – €172,348: 5%
- €172,348 – €287,213: 7%
- €287,213 – €574,323: 8%
- Over €574,323: 6%
These rates are effective from January 1, 2025. Please verify with your lawyer as rates may change.
Paying for Your Property
Consider opening a Portuguese bank account to handle payments for the property and utility bills.
It’s possible to get a mortgage, but only for properties that are habitable and have a licence for habitation. There are many mortgage brokers, such as Mortgage Direct, available to assist.
Foreign currency exchange companies, like Global Reach Currency Exchange, often offer better rates than banks for overseas property payments.
Completion of Sale (Escritura Pública de Compra e Venda)
To complete the purchase, you (or your representative) must meet at the Notary to sign the Deed of Purchase and Sale (Escritura Pública de Compra e Venda). All parties must be present unless power of attorney has been granted. If you don’t speak Portuguese, you’ll need a translator.
Once signed, pay the remaining balance. The notary will arrange the property registration at the Conservatória do Registo Predial.
Exemption from IMI (Annual Rates / Council Tax)
First-time buyers can apply for exemption from IMI (municipal property tax) for their main residence. Apply within 60 days of signing the deed. The exemption is granted for properties with a patrimonial value of:
- Up to €157,500: 8 years
- €157,500 – €236,000: 6-7 years
Exemption is not available for second homes or holiday properties.
This updated guide reflects the current legal and fiscal landscape for property buying in Portugal in 2025. Be sure to consult with a local lawyer to ensure compliance with any changes that may arise.