Buying Property in Portugal: How to Buy, What to Know, and Tips for Foreigners

Portugal has become one of Europe’s hottest destinations for buying property, attracting locals, expats, retirees, and international investors. Whether you’re dreaming of a second home by the sea or looking for a high-return investment, Portugal offers a unique combination of affordability, charm, and opportunity. In this blog, we’ll dive into the benefits of buying property in Portugal, explore its investment potential, and share tips on how to buy a property in Portugal as a foreigner—because yes, foreigners can buy property in Portugal, and the process is easier than you might think!

Homeownership Rate in Portugal

As of 2023, Portugal boasts an impressive homeownership rate of 74%, placing it among the highest in the European Union and far surpassing neighboring countries like Germany and France. This remarkable figure not only highlights the strong cultural value placed on homeownership by the Portuguese but also showcases the success of government-backed housing initiatives. With globalization reshaping the way we live and rising living costs in major cities around the world, Portugal has emerged as a top choice for those seeking to establish a second home or make a strategic property investment. 

Why Choose Portugal for Property Investment?

So, what makes Portugal such a standout destination? Here are eight reasons why Portugal property investment is a smart move:

1. Strategic Location

Nestled in Western Europe, Portugal is perfectly situated as a gateway to Europe, Africa, and the Americas. Whether for international travel or business, its connectivity makes it a magnet for global buyers.

2. A Lifestyle Like No Other

With its Mediterranean climate, stunning coastlines, and easy-going pace of life, Portugal is the ultimate destination for those seeking balance and beauty. Add in the famously friendly locals, and it’s easy to see why so many people are calling Portugal home.

3. Affordable Living Costs

Portugal offers incredible value compared to neighboring countries like Spain or France. From housing to healthcare to dining out, you’ll enjoy a high quality of life at a fraction of the cost.

4. Competitive Property Prices

Thinking about buying property in Portugal as a foreigner? You’ll be pleasantly surprised by the affordability of properties here. Whether you’re looking for a vacation home or a long-term investment, Portugal’s real estate market offers exceptional value.

5. Safe and Stable

Ranked as one of the safest countries in the world, Portugal’s low crime rate and political stability make it a worry-free place to live and invest.

6. A Thriving Tourism Market

Portugal’s tourism has been booming, particularly in hotspots like Lisbon, Porto, and the Algarve. This translates to high demand for rental properties and attractive rental yields—whether for short-term holiday lets or long-term stays.

7. Modern Infrastructure

Portugal combines old-world charm with modern convenience. From high-speed internet and advanced healthcare to reliable transport networks, the country offers everything you need for a comfortable lifestyle.

8. Flexible Mortgages for Foreign Buyers

Thinking about how to finance your dream home? Portugal’s banks offer competitive mortgage options, even for non-residents, making it easier than ever to buy property in Portugal as a foreigner.

Portugal Property : Locations, Property Types, and Price Overview

Portugal’s real estate market offers a wide range of advantages, attracting people from all walks of life to invest in or buy property. Property prices vary depending on location, property type, and market trends. Below, we provide an overview of common property types and a snapshot of property prices in Portugal’s key regions as of the end of 2024.

Common Property Types and Descriptions

Property Type	Description
Apartamento	An apartment or flat, typically found in urban areas.
Moradia Isolada	Detached houses.
Moradia Geminada	Semi-detached house.
Moradia em Banda	Terraced house.
Vivenda	Often used interchangeably with “moradia,” typically referring to a detached house with a garden.
Quinta	A traditional country estate or farm, often located in rural areas and surrounded by countryside or vineyards.
Condomínio	A condominium or gated community, usually offering shared amenities like pools and gyms.
Tipologia (T1, T2, T3)	Indicates the number of bedrooms; for example, T2 means a two-bedroom property.

Average Prices by Property Type

Property Type	Average Price (per square meter)
Apartments	€1,920
Houses	€1,317

Average Property Prices in Key Regions

Region	Average Price (per square meter)
Lisbon Metropolitan Area	€4,935
Algarve	€4,385
Porto Metropolitan Area	€3,937
Alentejo	€3,181
Central Portugal	€2,098
Northern Portugal	€1,903

The data shows that property prices are highest in major cities like Lisbon and Algarve, while other regions offer more affordable options.

Top Affordable and Promising Properties in Portugal

If you’re looking for affordability and future growth potential, consider these regions. Here, you’ll find budget-friendly living options and exciting opportunities in Portugal’s diverse property investment market.

Region	Features	Average Price (per square meter)
Mêda	One of the most affordable towns in Portugal.	€156
Figueira de Castelo Rodrigo（	Low prices and stunning landscapes.	€185
Tabuaço	Affordable with a strong rural charm.	€226
Santarém	Just an hour from Lisbon, with good infrastructure.	NA
Évora	A historic city with rich cultural heritage and low living costs.	NA
Setúbal	A coastal city just 30 minutes from Lisbon	NA

Can Foreigners Buy Property in Portugal?

Portugal offers a diverse real estate market and imposes no legal restrictions on foreign property buyers. Whether you’re a citizen of an EU member state or a resident of a non-EU country, you are free to purchase property in Portugal. This open and welcoming policy has made Portugal a popular choice for international investors, retirees, and digital nomads.

The Impact of Foreign Buyers on Portugal’s Real Estate Market

Portugal’s Golden Visa program underwent major changes in 2023, with real estate investment no longer qualifying as a valid pathway to obtain the visa. Despite this, foreign interest in Portugal’s real estate remains strong. Here are key insights into the role of foreign buyers in Portugal’s property market:

• Market Share: In 2024, foreign buyers accounted for approximately 12% of total real estate sales in Portugal, with an average annual growth rate of 8% between 2019 and 2024.
• Investment Scale: Foreign direct investment in Portuguese real estate reached €30.4 billion in Q3 2023, a record high and a 14% increase compared to the same period in the previous year.
• Average Purchase Amount: Non-EU buyers tend to spend more, with an average property price of €405,000, compared to €277,000 for EU buyers.

• Popular Regions: In 2023, the Algarve accounted for nearly 30% of all international property purchases, the Lisbon metropolitan area attracted around 25%, and Porto and Northern Portugal captured 15%.

How Can Foreigners Buy Property in Portugal?

The process for foreigners to purchase property in Portugal is straightforward, provided you prepare the required documents and follow the necessary steps. Once the transaction is complete, whether for personal use or investment purposes, you can enjoy the many benefits that Portugal’s real estate market has to offer.

Documents Needed to Buy Property in Portugal

To ensure a smooth and legally compliant transaction, you’ll need to prepare the following documents when purchasing property in Portugal:

• Recent Tax Returns: Proof of your financial and tax status.
• Valid Passport: Serves as your primary form of identification to confirm the legality of your transaction.
• Portuguese Tax Identification Number (NIF): Mandatory for any financial transactions in Portugal, including purchasing property. Non-EU citizens will need to appoint a tax representative to obtain an NIF.
• Proof of Address: A recent utility bill or rental agreement from your country of residence.
• Portuguese Bank Account (Optional): While not required, opening a local bank account can make transactions smoother and help manage currency exchange fluctuations.
• Financial Documents (for Mortgage Applications):
  • Recent payslips
  • Bank statements
  • Credit report

By preparing these documents in advance, you’ll be well-equipped to navigate the property buying process and enjoy the perks of owning real estate in Portugal.

Step-by-Step Guide to Buying Property

1. Obtain a NIF: Visit a local tax office (Finanças) or appoint a fiscal representative to acquire your Portuguese tax number.
2. Open a Portuguese Bank Account: Facilitates smoother financial transactions and helps manage currency exchange fluctuations.
3. Engage a Real Estate Agent or Buyer’s Agent: They can assist in finding suitable properties and navigating the local market. Buyer’s agents may have access to off-market listings and can negotiate on your behalf .
4. Search for Property: Explore listings online, attend viewings, and shortlist properties that meet your criteria.
5. Negotiate and Make an Offer: Once you’ve found a property, negotiate the price with the seller.
6. Sign the Promissory Contract (Contrato-Promessa de Compra e Venda – CPCV): This preliminary contract outlines the terms of the sale. A deposit, typically 10% of the purchase price, is paid at this stage .
7. Conduct Due Diligence: Your lawyer will verify the property’s legal status, ensuring there are no outstanding debts or legal issues.
8. Finalize the Sale (Escritura Pública de Compra e Venda): The final deed is signed in the presence of a notary, officially transferring ownership.
9. Register the Property: Update the land registry to reflect the new ownership.
10. Pay Applicable Taxes and Fees

Portugal welcomes foreign property buyers with no restrictions and a simple process. However, navigating legal details can be challenging. Consult professional advisors for expert help. Schedule a free consultation today!

Do Foreigners Need to Pay Property Taxes in Portugal?

Yes, foreigners buying or investing in real estate in Portugal are required to pay the same property taxes as local residents. Regardless of residency status, foreign buyers must fulfill their tax obligations when purchasing, owning, or selling property. This includes property transfer tax (IMT), annual municipal property tax (IMI), additional municipal property tax (AIMI, if applicable), stamp duty, and capital gains tax.

The 5 Main Types of Property Taxes in Portugal

1. Property Transfer Tax (IMT – Imposto Municipal sobre Transmissões Onerosas de Imóveis)

This is a tax levied on the transfer of property ownership. The tax rate varies based on the property value, location, and purpose (primary or secondary residence).

• Residential properties: Rates range from 0% to 7.5%.
• Rural properties: Typically taxed at 5%.
• Commercial properties: Taxed at 6.5%.

2. Annual Municipal Property Tax (IMI – Imposto Municipal sobre Imóveis)

This annual tax is based on the taxable value of the property (VPT).

• Urban properties: Rates range from 0.3% to 0.45%.
• Rural properties: Taxed at 0.8%. Some exemptions apply, such as properties valued under €125,000 used as a primary residence by individuals earning less than €153,300 annually. These may qualify for up to three years of IMI exemption.

3. Additional Municipal Property Tax (AIMI – Adicional Imposto Municipal sobre Imóveis)

This tax applies to properties with a taxable value exceeding €600,000.

• For individual owners:
  • 0.7% on the portion between €600,000 and €1 million.
  • 1% on the portion above €1 million.
  • 1.5% if the property exceeds €2 million.
• For corporate entities: A flat rate of 0.4%.

4. Stamp Duty (Imposto de Selo)

A one-time stamp duty of 0.8% of the purchase price or taxable value must be paid before signing the final contract. Additionally, a 10% stamp duty applies to property inheritance or gifting (excluding spouses, children, and parents).

5. Capital Gains Tax

This tax applies when selling a property.

• Residents: Tax is levied on 50% of the capital gains at the marginal income tax rate.

Non-residents: Tax is levied at a flat rate of 28% on the entire capital gain.

Tax Obligations for Foreigners

Foreigners’ tax responsibilities in Portugal depend on their residency status:

Non-Residents

• Portuguese Tax Number (NIF): Required for any financial transaction, including property purchases, which must be obtained through a tax representative.
• Rental Income Tax: Rental income from Portuguese properties is subject to a flat tax rate of 25%.
• Annual Tax Obligation: Non-residents must pay IMI annually and AIMI if the property value exceeds €600,000.

Residents

• Global Income Taxation: Residents are taxed on their worldwide income, including rental income from Portuguese properties, at progressive rates (14.5% to 48%).
• IMI Exemption: Primary residences that meet certain criteria may qualify for IMI exemption.

Due to the complexity of Portuguese tax regulations, it is strongly recommended that foreign property owners consult a professional familiar with local tax laws. This ensures compliance and effective tax planning, reducing both legal risks and tax liabilities.

Common Pitfalls and Precautions When Buying Property in Portugal

Purchasing property in Portugal is a promising investment, but there are common pitfalls to watch out for. Failing to address these risks may lead to unnecessary losses or transaction issues. Below are some key concerns and recommendations:

1. Overlooking Legal Due Diligence

Ignoring legal checks can lead to issues such as ownership disputes, unauthorized expansions, or unpaid debts.

Recommendation: Hire a qualified real estate lawyer to conduct thorough legal due diligence. Ensure the property has clear ownership and no outstanding legal or financial obligations.

2. Underestimating Total Costs

Beyond the property price, buyers should account for additional costs:

• IMT: Varies by property value and type.
• Stamp Duty: 0.8% of the property value.
• Notary and Registration Fees: Normally a few hundred euros.
• Lawyer Fees: Depending on the scope of service, from €1000 of a simple transaction and due diligence to tens of thousands for more complicated acquisitions.

Recommendation: Budget an additional 8%~10% of the property price to cover these costs.

3. Ignoring Currency Exchange Risks

For international buyers, exchange rate fluctuations can significantly impact the final payment.

Recommendation: Use currency exchange services to lock in favorable rates and minimize risk.

4. Skipping Property Inspections

While not mandatory in Portugal, skipping inspections can hide issues such as structural damage, dampness, or unauthorized modifications.

Recommendation: Hire a professional inspection service to identify potential defects and avoid costly repairs.

5. Choosing the Wrong Location

Location is critical to property value and investment returns. Poor location choices may not align with lifestyle needs or investment goals.

Recommendation: Consider local amenities, transportation, future development potential, and conduct thorough research and site visits.

6. Neglecting Legal Support

Handling the purchase process alone without understanding Portuguese laws can increase risks.

Recommendation: Work with a local lawyer to ensure all procedures are legally compliant and your rights are protected.

7. Disregarding Future Resale Value

Even if you plan to hold the property long-term, its resale value should not be overlooked.

Recommendation: Focus on areas with strong infrastructure, economic growth, and quality schools to enhance property value.

Conclusion

Buying property in Portugal is a lucrative investment opportunity, but it requires careful attention to potential risks. Common challenges include neglecting legal due diligence, underestimating costs, currency exchange fluctuations, skipping inspections, poor location choices, and ignoring future resale value. By working with professional lawyers, real estate agents, and inspection services, and conducting thorough research, you can avoid these pitfalls and ensure a smooth transaction.

As a fully licensed real estate agency holding the official AMI license (Licença de Mediação Imobiliária), The Golden Portugal provides expert guidance for buying and selling property in Portugal. We invite you to consult us for a professional consultation.

Warmly,

Susana Yang
Founder & CEO, The Golden Portugal

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