Step By Step Guide to Buying Property in Portugal

Why people choose Portugal?

Affordability, accessibility, good long-term investment and not forgetting the all important easy living, Portugal ticks all the boxes for many looking for an investment property, holiday home or permanent move. With it's warm climate and friendly locals, more and more people are looking to Portugal as a possible location to buy their property in the sun.

The Algarve has been the number one location in Portugal for over a decade, but with popularity increasing property prices, the region has now become somewhat reserved for those with deeper pockets. Buyers are being attracted to other regions of Portugal offering more of the same available in the south of the country, but at a lower cost.

Locations such as the Silver Coast in Central Portugal and Costa Verde further north have both become priority locations for new developments. Under new, stricter planning and building controls from that of the south in past years, these areas has seen sympathetic development and have experienced continued growth with property prices increasing up to 20% in recent years.

Transport routes are continually being updated, with Porto airport having undergone a massive program of refurbishment due to the Euro 2004 football championships and main motorway connections with the A22 and A1 running through the region, Porto is well placed as the gateway to the central and northern regions.

Prepared to undertake a building project? Looking for more of a return on an investment? Or looking for a quieter life away from the hustle and bustle of the developing areas? Rural Portugal is proving popular in the resale market and turning your search more inland at opportunities such as resale property, land and renovation opportunities can repeat it's rewards. Properties of this type are available throughout the central and northern regions, and at some of the cheapest prices in Portugal.

Steps to owning property in Portugal

1  Use our search facility to find your ideal property you can search by price, location or property

2  When you have found a property you are interested in click "save to my properties" and send
    us an enquiry. We will then liase with the owner to get as much information as we can. 
    We do not just hand out telephone numbers and leave you to it.

3  Complete the contact information form and click "submit". This will send an e-mail to us
    at automatically.

4  We will contact you as soon as possible.

5  Arrange a viewing trip. We are happy to help you do this and can provide advice on travel and
    accommodation. We can also book your accommodation for you if you wish.

6  Meet us and view your chosen property.

7  If you decide it's the one for you, agree a price with the owner.

8  Any necessary negotiations or mediation will be carried out by our Joint Venture partners Cidade XL Imobiliaria (AMI 5891).

  Appoint a lawyer (sometimes not necessary).

  Obtain a fiscal number.

11  Open a bank account (not necessary at this stage but highly recommended).

Some of the steps listed above have been outlined in more detail below. Home For Sale in Portugal
can help you, every step of the way.

1. Fiscal Number Numero Fiscal de Contribuinte

Before entering into the transaction to purchase a property in Portugal you will need  a fiscal  number (Numero Fiscal de Contribuinte). This similar to the N.I. number in the UK but is more widely use in Portugal when purchasing services such as water, electricity and telephone. Obtaining a fiscal number is a simple and straight forward process and we will be happy to help you do this.

You will need :

• Your Passport
• An address in Portugal where your Fiscal Card can be sent to (we can help with this).
• Payment of approx €6

2. Bank Account

It is advisable to open a bank account as soon as possible in Portugal as it is likely that you will want to transfer money from your home bank to Portugal for your property purchase.

We have a number of banks and finance transfer companies listed in our Resource Directory. We will be happy to help you through the process.

You will need :

•    Your Passport
•    Proof of address in the UK (utility bill, etc.)
•    Some banks insist on production of your original birth certificate (not a copy), some do not.

Related links:
Banks in Portugal

3. Promissory Contract - Promessa de Compra e Venda

When you have chosen your property and the price has been agreed with the seller it is normal for you to enter into a Promissory Contract. This is your commitment to buy and the sellers commitment to sell and is a legally binding contract.
At this stage a deposit of between 10% and 20% of the price of the property is usually paid.
If you fail to complete the purchase for no good reason you will lose your deposit.
If the seller fails to complete the sale for no good reason he/she has to pay you twice the deposit.

The Promissory Contract includes :

•    The price of the property
•    The address, tax number and registration number of the property
•    Proof of identity of both parties
•    Proof of ownership
•    The amount of the deposit paid
•    The deadline date for completion.

It is possible to go straight to completion without a Promissory Contract if both parties agree.
Your chosen lawyer will ensure all the necessary documentation is in place at this stage and we will be happy to help liaise in this process.
4. Purchase Tax - Imposto Municipal (IMT)

Purchase Tax (IMT) must be paid prior to the completion of the purchase and a receipt for the payment must be shown to the notary at the signing of the final deed.

Different rates of tax (IMT) apply to permanent residences and second homes.

Tax (IMT) on land only is 5%

Tax (IMT) on a property is set out below.

Tax (IMT) on a mixed property (urban property and land) is 5% for the land and tax on the urban property as set out below.

Second homes or holiday homes:

Purchase price (€)  % of purchase price  Adjustment (reduced by)
 0 to 87,500  1  0
 87,500 - 119,700  2  875
 119,700 - 163,200  5  4,466
 163,200 - 272,000  7  7,730
 272,000 - 521,700  8  10,450
 over 521,700  6  0

E.G. If the purchase price is €200,000 the formula used is :
€200,000 x 7% = €14,000 less €7,730 = €6,270

Permanent residences:

Purchase price (€)  % of purchase price  Adjustment (reduced by)
 0 to 87,500  0  0
 87,500 - 119,700  2  1,750
 119,700 - 163,200  5  5,341
 163,200 - 272,000  7  8,605
 272,000 - 543,900  8  11,325
 over 543,900  6  0

E.G. If the purchase price is €200,000 the formula used is :
€200,000 x 7% = €14,000 less €8,605 = €5,395

5. Completion of Sale - Escritura Publica de Compra e Venda

Your lawyer will make an appointment with the Notary Office for the completion of the process. All parties involved must attend (seller, seller’s lawyer, buyer, buyer’s lawyer) the signing. If you do not speak Portuguese you must have a translator present to ensure you fully understand the process.

•    Your lawyer will have organised all the relevant documentation
•    The Notary will read the Deed of Purchase to you and the seller
•    You and the seller will sign the Deed of Purchase
•    The balance of the purchase price is paid to the seller.

You are now the proud owner of your new property!

One final step is to officially register your property in your name. This is a straightforward process and your lawyer will advise you on how to do this.

If you have purchased your property as your main residence you may be able to apply for exemption from council tax (IMI) for up to the first 6 years of ownership. Again, your lawyer will be able to advise you on this.

Contact us if you require further information about the buying process.