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Your Guide to Property Investment in Portugal 2025

12 Mar 2025 min de leitura

Your guide to property investment and a life of quality in Portugal

Living in Portugal has grown more appealing to expats, with a unique set of benefits that make it one of the most desired locations for those looking for a new home or investment opportunity. Portugal has captivated the attention of foreign buyers and investors alike, thanks to its remarkable 300 days of sunshine each year, a welcoming attitude, and a calm pace of life, but its attraction extends beyond its natural beauty and good climate. In comparison to other European countries, Portugal has a lower cost of living and more inexpensive property costs. This financial edge, along with a rich tapestry of European history, lively culture, and world-class beaches, makes Portugal an enticing location for expats and investors.

One of Portugal's crown jewels for real estate investment is the island of Madeira. Known for its lush landscapes, temperate climate, and breathtaking views, Madeira offers an exceptional quality of life that has become increasingly appealing to foreign residents. In 2024, the island experienced notable economic growth of 2.8% and an impressive 8.7% increase in median sales price per square meter, attracting both domestic and international investors. The 7.5% rise in new foreign residents further solidifies Madeira's position as a strategic location for real estate investment.

As we delve deeper into the Portuguese property market, we'll present detailed information for international purchasers wishing to make Portugal their new home or investment location.

The allure of Portugal: A destination for investment and lifestyle

In recent years, Portugal has experienced a surge in popularity among expats and investors alike. According to Euro News, Portugal, alongside Spain, was a top destination for property acquisition in Europe in 2024, with over 270,000 searches related to buying property in the country.

Overcoming obstacles for foreign buyers

No restrictions on foreign buyers: Portugal imposes no restrictions on non-EU/EU citizens looking to purchase property.

Advice:

With the right guidance from a buyer's agent and a real estate lawyer, the property purchase process can be relatively straightforward.

While professional real estate assistance isn't strictly mandatory, it is highly recommended to engage a Portuguese lawyer and a real estate agent.

Visa options for non-EU citizens:

Several visa options are available for those planning to relocate and seek residency in Portugal, including the D7 Visa and Digital Nomad Visa.

Financing considerations:

Currency exchange rates can significantly impact the overall cost of the property purchase for citizens who don’t use the euro.

Portuguese tax identification number (NIF):

A NIF is essential for property purchases and opening a local bank account for utilities and other services.

Navigating the Property Buying Process: A Step-by-Step Guide

To facilitate a smooth and successful property purchase in Portugal, consider the following steps:

Step 1: Obtaining a Portuguese tax mumber (NIF)

Both Non-EU and EU citizens must obtain a NIF (Portuguese tax identification number), which is essential for opening a bank account and completing financial transactions in Portugal. The process varies slightly depending on the applicant's nationality and residency status.

EU/EEA/Swiss Nationals:

Tax Residents (spending >6 months/year in Portugal):

- Identity document, passport, or Certificate of Registration as EU Citizen (CRUE)

- Proof of address

Non-Tax Residents:

- Identity document or passport

- Proof of address from your home country

Non-EU/EEA/Swiss Nationals:

If already in Portugal:

- Passport

- Residence permit (even temporary)

- Proof of address

If applying from abroad:

- Passport

- Proof of address

- Fiscal representative (only mandatory if you own property/vehicles, have employment contracts, or register as self-employed)

Step 2: Securing financing

Assess your finances, explore mortgage options from Portuguese banks, and understand all associated costs, including taxes, legal fees, and property registration expenses. Ensure you have funds available in a Portuguese bank account to cover the purchase price and any applicable fees and taxes before proceeding to the final deed.

Step 3: Finding a property

Establish a budget and thoroughly research the Portuguese real estate market, considering factors like location, amenities, and rental potential. Seek guidance from real estate professionals like buyer's agents or real estate agents to secure the best possible deal and streamline the process.

Step 4: Purchasing the property

Negotiate an offer with the seller once a suitable property is found, potentially with the assistance of a real estate professional. Engaging a buyer's agent ensures your best interests are represented during negotiations. Clarify any terms or conditions before committing to the offer.

Step 5: Signing the promissory contract (CPCV)

Upon acceptance of the offer, a Reservation Agreement might require a refundable fee. The Promissory Contract (CPCV) formalizes the deal, often requiring a 10 to 20 percent deposit. This contract provides a binding commitment for both parties, ensuring that the seller and buyer are legally obligated to proceed with the transaction. If the seller backs out, they must return double the deposit. If the buyer backs out, the seller may retain the deposit. The Promissory Contract also guarantees that the seller will not sell the property to another party once signed.

Step 6: Preparing for the Escritura (Final Deed)

Before the final deed, confirm that all necessary funds are in your Portuguese bank account, including the amount to cover the property purchase and any related taxes and fees. Ensure that any financing agreements are finalized and that the mortgage funds (if applicable) are ready for disbursement.

Step 7: Paying IMT and Stamp Duty

Before the deed is signed, you must pay the IMT (Property Transfer Tax) and Stamp Duty. To make this payment, you need to request the settlement documents from the Património section at the tax office (Finanças). Since filling out these forms can be complex, it’s advisable to seek help from your real estate agent or lawyer.

Once you have the settlement documents, you can pay the IMT and Stamp Duty at the tax office's treasury department (tesouraria) or through your bank. While at the bank, you should also issue the certified check required for the deed.

Note: Some notary offices can issue the tax settlement documents directly, allowing you to pay the taxes at the notary office when signing the deed.

Step 8: Property inspection before signing

Before signing the Escritura, conduct a final inspection of the property. Confirm that the property is in the agreed-upon condition and that any fixtures or furnishings included in the sale are present and intact. This step helps prevent post-sale disputes.

Step 9: Signing the escritura

The Escritura, or Final Deed, officially transfers property ownership. It is signed before a Notary and involves paying any remaining balances and fees. After signing, the buyer becomes the official owner, completing the process. The Notary will ensure that all legal requirements are met, and that the transaction is properly recorded.

Step 10: Registering the property

After signing the deed, the property must be registered with the Land Registry Office (Conservatória do Registo Predial) in the buyer’s name. The notary will usually handle this registration, but you may also need to confirm it personally. Registration ensures that the property is legally recognized under your ownership.

Step 11: Complying with ongoing property tax obligations

Once purchased the property and it is in the buyers’ name, they will be responsible for paying the Municipal Property Tax (IMI) on an annual basis. The IMI rate varies according to the municipality and the value of the property. If it is intended to rent out the property, you must ensure that you comply with your rental income tax obligations.

Understanding property taxes in Portugal

Familiarizing yourself with the applicable property taxes is crucial when buying property in Portugal. These taxes are payable either at the time of purchase or on an annual basis.

Property taxes at the time of purchase:

Property Purchase Tax (IMT): The Imposto Municipal Sobre as Transmissões Onerosas de Imóveis (IMT), or Property Transfer Tax, is a property transfer tax levied on property acquisitions. The IMT tax rate ranges from 0 to 10 percent, depending on the property price, location, type, and purpose (primary residence or holiday home). A fixed rate of 10 percent applies to property buyers from blacklisted jurisdictions. The tax can be calculated using the following formula: IMT = property value x tax rate x tax deduction.

Stamp Duty: The Stamp Duty (Imposto do Selo) is payable at the time of property acquisition. The amount depends on the property's worth, and the rate is levied on the higher value between the business value and the property value at the tax office. The Stamp Duty rate for purchasing property in Portugal is 0.8 percent. For property donations, the rate is 10 percent.

Notary fees: While not technically a property tax, Notary fees must be considered. A Notary provides official documents proving property ownership. The fee typically ranges between 500€ and 1.000€.

Taxes due on an annual basis:

Municipal property tax (IMI): The Imposto Municipal sobre Imóveis or Immovable Property Tax is an annual tax paid by property owners. The IMI tax rate varies depending on the municipality and is calculated based on the Property Tax Value (VPT), not the purchase price. The IMI Tax rate typically ranges from 0.3 to 0.45 percent of the VPT for urban properties, reaching 0.5 percent in some cases. For rustic buildings, the rate is 0.8 percent.

AIMI (Additional to IMI): AIMI is levied when the property value exceeds 600.001€ and has three tiers:

- 0.7 percent tax on property valued between 600,001€ and 1 million €

- 1 percent tax on property valued between 1 million € and 2 million €

- 1.5 percent tax on property valued above 2 million €

Capital gains tax in Portugal: Capital gains tax applies to profits from the sale of property in Portugal. Both residents and non-residents are now subject to capital gains tax under similar terms.

- Residents: Taxable on a portion of the capital gains, which is added to their overall income and taxed accordingly.

- Non-Residents: Taxable on the full capital gains amount at a fixed rate.

Important Considerations:

- Costs related to property improvements or maintenance carried out in the last five years can be deducted from the taxable amount.

- When filing taxes, it’s necessary to provide details such as the purchase date, purchase price, and invoices for improvements or maintenance.

- Residents may qualify for exemptions if the property sold is a primary residence and the proceeds are reinvested in another primary residence in Portugal within a specific period.

Additional property purchase costs:

Besides the total purchase cost of the property and taxes, also account for the following additional expenses:

Notary fees: 500€ – 1.000€

Registration fees: 250€

Frequently Asked Questions about Buying Property in Portugal

Do I need a lawyer when buying a property?

Hiring a real estate lawyer is not mandatory when purchasing a property in Portugal as a foreigner. However, professional legal assistance is highly recommended to ensure the purchase process complies with Portuguese laws and proceeds smoothly.

Do I need a real estate agent when buying a property?

Working with a local real estate agent or a buyer’s agent is strongly advised for foreign investors navigating the property acquisition process in Portugal. Real estate agents assist with property searches and provide valuable insights into the local market. However, keep in mind that real estate agents in Portugal represent the seller and earn a higher commission for a higher sale price. Buyer’s agents, work solely for the buyer, ensuring that the buyer’s needs are prioritized, and potential conflicts of interest are avoided.

What are the additional fees when foreigners purchase real estate in Portugal?

In addition to the property price, buyers must account for other costs such as notary and registration fees, legal fees, property transfer tax (IMT), stamp duty, and potential municipal property tax. If you decide to sell the property, you may also be subject to Capital Gains Tax.

How much is the deposit payment when buying property in Portugal?

Deposits typically range from 10% to 20% of the purchase price, depending on whether a mortgage is involved. To be on the safe side, non-residents and foreign buyers should budget approximately 30% of the property price for the deposit.

Is property affordable in Portugal?

Compared to other European countries, real estate in Portugal is relatively affordable. Property in Lisbon city center costs around €6,934 per square meter, while in Porto city center, it costs approximately €4,883 per square meter. Properties in interior regions, such as the North, Center, and Alentejo, tend to be more affordable.

Can British citizens buy property in Portugal?

Yes, British nationals can buy residential and commercial property in Portugal without restrictions. There are no limitations on foreign property ownership in the country.

Why buy property in Portugal?

Portugal offers an exceptional quality of life and several advantages for property investors, including an affordable cost of living, a pleasant climate, and high-quality education and healthcare systems. Whether you are investing in an apartment or a luxury home, Portugal’s dynamic market offers strong potential for return on investment. Engaging a lawyer is essential to avoid risks and ensure a smooth transaction.

How to find property in Portugal?

You can start by conducting a Google search for terms like "buying property in Portugal" or "Portugal real estate" to get a general overview. However, it's often more efficient to search directly on Idealista, the most widely used platform, where you can find a wide range of properties from various real estate companies. QUALI Real Estate also offers a professional and streamlined service to help you navigate the market with confidence.

Can foreigners buy property in Portugal?

Yes, foreigners can purchase property in Portugal without restrictions. Non-residents have the same property ownership rights as Portuguese citizens. Portuguese banks may offer mortgage loans to foreign citizens, covering up to 75% of the purchase price.

What are the risks of buying property in Portugal?

Potential challenges include legal complexities, hidden costs, and unclear property titles. Engaging a local lawyer to conduct thorough due diligence is crucial to prevent complications and secure a smooth transaction.

Is buying property in Portugal a good investment?

Yes, Portugal’s stable real estate market and growing tourism sector make it an attractive investment destination. High rental yields in various regions offer promising returns, and the lack of restrictions on foreign property ownership enhances investment potential.

Can US citizens buy property in Portugal?

Yes, US citizens can buy property in Portugal without restrictions. The process is straightforward, whether for a vacation home or a permanent residence.

How long can you stay in Portugal if you own property?

Buying property in Portugal does not automatically grant residency. To stay in Portugal, you must apply for a residency visa, such as the Digital Nomad Visa, D7 Visa, or Golden Visa. Note that the Golden Visa no longer includes real estate purchases as a qualifying investment. However, alternative routes for the Golden Visa include investing €500,000 in Portuguese investment funds, contributing €250,000 to cultural heritage, supporting scientific research with €500,000, or creating ten jobs in Portugal.

What documents are required to buy property in Portugal?

To buy property in Portugal, the buyer needs to provide the following documents:

Identification Document (valid passport or photo ID)

Portuguese Tax Number (NIF)

Proof of Address (e.g., recent utility bill or bank statement)

Proof of Marital Status (if applicable)

Power of Attorney (if applicable)

Is it a good time to buy property in Portugal?

Yes, Portugal remains an attractive destination for property investment due to its low cost of living, good climate, and stable real estate market. Rental yields in Lisbon and Porto reached 6.8% and 6.6%, respectively, in 2025.

Do expats pay taxes in Portugal?

Yes, expats are subject to property taxes at the time of purchase and on an annual basis. Capital Gains Tax also applies when selling a property.

Is there property tax in Portugal?

Yes, property taxes in Portugal include the Property Purchase Tax (IMT), Municipal Property Tax (IMI), and Additional to IMI (AIMI).

Is there a wealth tax in Portugal?

Portugal does not impose a wealth tax. However, properties valued above 600.001€ are subject to AIMI, payable post-purchase.

Can I buy property with cryptocurrency in Portugal?

Yes, purchasing property with cryptocurrency is allowed in Portugal. However, buyers must declare the origin of funds, including digital wallets and bank accounts, to comply with financial regulations and prevent tax evasion and money laundering.

Find the property that suits best your lifestyle by exploring our listings and work with experts who offer market insight, smart investment choices and exceptional customer service. Contact QUALI Real Estate today to begin your journey to discover the property that meets your needs.

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