buying property in portugal

A Guide to Buying Property in Portugal: What You Need to Know Before You Invest

Portugal continues to be one of the most attractive destinations in Europe for foreign property buyers. With its mild climate, stunning coastline, affordable living costs, and high quality of life, it’s no surprise that more and more people are choosing to purchase homes here—whether for retirement, relocation, or investment purposes. But before you start browsing property listings and planning your dream life under the Iberian sun, it’s crucial to understand the ins and outs of the local real estate market.

If you’re considering buying property in Portugal, it’s important to get familiar with the legal processes, financial responsibilities, and regional differences that can impact your decision. From choosing the right location to understanding property taxes and residency options, this guide will walk you through the key steps and considerations to make your home purchase a smooth one.

Why Portugal Is Popular with International Buyers

There are several compelling reasons why Portugal attracts property buyers from all over the world. First, the country offers excellent value for money. Compared to other Western European countries, real estate prices in Portugal remain relatively affordable, even in sought-after areas like Lisbon, Porto, and the Algarve.

Second, the government has introduced several initiatives over the years to attract foreign investment. Programs like the Golden Visa (though recently limited in scope) and the Non-Habitual Resident (NHR) tax regime have made it even more enticing for foreigners to invest in Portuguese real estate.

Finally, the laid-back lifestyle, delicious cuisine, safety, and beautiful natural surroundings add to the country’s appeal. Whether you're looking for a beachside villa, a city apartment, or a rustic home in the countryside, Portugal has something to offer everyone.

Key Steps in the Property Buying Process

Define Your Budget and Financing Options
Before starting your property search, it’s essential to have a clear understanding of your budget. Don’t forget to factor in additional costs such as taxes, legal fees, notary costs, and agency commissions—these can add around 7–10% to the property’s purchase price. Foreigners can apply for a mortgage from Portuguese banks, typically up to 70–80% of the property’s value, depending on your residency and financial profile.
Choose the Right Location
Portugal is diverse in geography, lifestyle, and property prices. Lisbon offers cosmopolitan living and solid investment potential, but prices have risen significantly in recent years. Porto provides a charming blend of tradition and innovation at slightly lower costs. The Algarve is ideal for beach lovers and retirees, while the Silver Coast and inland regions are gaining popularity for their more affordable prices and authentic Portuguese feel.
Hire a Local Lawyer (Advogado)
A reliable local lawyer is essential to help you navigate the buying process, especially if you're unfamiliar with Portuguese law. They will verify ownership, ensure there are no debts or liens on the property, and handle contract reviews. This protection is especially important when dealing with private sellers or unfamiliar areas.
Get a Portuguese Fiscal Number (NIF)
All property transactions in Portugal require a NIF—Número de Identificação Fiscal. This is your tax number and can be obtained at a local tax office. If you’re not in the country, your lawyer can typically arrange it on your behalf.
Promissory Contract and Final Deed
Once you’ve agreed on a property, you’ll sign a Contrato de Promessa de Compra e Venda (Promissory Contract) and pay a deposit (usually 10%). This contract legally binds both parties. The final deed (Escritura) is then signed before a notary, at which point the remaining balance is paid, and the property is officially registered in your name.

Taxes and Fees to Consider

When buying property in Portugal, be prepared for the following costs:

IMT (Property Transfer Tax): Based on the property’s value, with progressive rates up to 8%.
Stamp Duty: Usually 0.8% of the property price.
Notary and Registration Fees: Varies, but typically around €1,000–€2,000.
Legal Fees: Around 1%–2% of the purchase price.
Annual Municipal Tax (IMI): Between 0.3% and 0.8% of the property’s tax value.

Can You Buy as a Non-Resident?

Yes. There are no restrictions on foreigners buying property in Portugal. Whether you're from the EU or elsewhere, you can purchase property as a non-resident. However, owning property doesn’t automatically grant residency. If you plan to live in Portugal for more than 90 days in a 180-day period, you’ll need to apply for the appropriate visa or residency permit.

Things to Watch Out For

Old properties may have hidden renovation needs, legal irregularities, or heritage restrictions.
Unlicensed builds or modifications can cause complications with future sales or renovations.
Tourist licenses (Alojamento Local) are required for short-term rentals. These are restricted in some high-demand areas, so check the local municipality’s rules before buying a property to rent.

Final Thoughts

Buying property in Portugal can be a life-changing and rewarding experience, but it requires careful planning and informed decision-making. By understanding the process, working with local professionals, and doing your research, you can avoid common pitfalls and make a sound investment.

Whether you're looking for a vacation home, a rental property, or a place to retire, Portugal offers a stable and attractive market. Take your time, seek expert advice, and enjoy the journey—your dream home in Portugal could be closer than you think.