Portugal Property Buying for Foreigners: Legal Checklist

How does buying real estate in Portugal work?

Buying real estate in Portugal usually follows three stages: due diligence, a promissory contract with a deposit, and then the final deed and registrations. The process is structured and relatively quick, but you must control title, licences, debts and taxes at each stage to avoid serious problems.

Main steps in a typical Portuguese property purchase

1. Initial checks and reservation
   • Find a property, usually via an estate agent (imobiliária) or developer.
   • Obtain a Portuguese tax number (NIF) if you do not already have one.
   • Ask for basic documents: Land Registry certificate (certidão do registo predial or certidão permanente), tax certificate (caderneta predial), energy certificate, and copy of relevant licences.
   • Sometimes a small reservation agreement and fee are used to remove the property from the market before full due diligence.
2. Legal due diligence
   • Your lawyer checks:
     • Ownership and encumbrances at the Conservatória do Registo Predial.
     • Tax status and cadastral data at the Serviço de Finanças.
     • Planning and use licences at the local Câmara Municipal (Municipality).
     • Condominium rules, minutes and debts if it is an apartment or part of a complex.
   • For rural or urban land, planning parameters and any restrictions (protected areas, servitudes, agricultural rules) are also checked.
3. Promissory Contract - CPCV (Contrato Promessa de Compra e Venda)
   • Once due diligence is acceptable, buyer and seller sign a CPCV.
   • The buyer pays a deposit, typically 10-30% of the price.
   • The CPCV sets:
     • Final price and payment terms.
     • Date or conditions for the final deed (escritura).
     • Penalties if either party defaults (usually double-deposit rule under the Civil Code).
   • Often signed before a notary, lawyer or solicitor (solicitador) to ensure formalities.
4. Final Deed (Escritura) or Authenticated Private Document
   • The final transfer takes place before:
     • A public notary (cartório notarial), or
     • A lawyer, solicitor or registry officer using an authenticated private document.
   • The buyer must:
     • Pay IMT transfer tax and stamp duty to the Autoridade Tributária e Aduaneira (Tax Authority).
     • Pay remaining purchase price (often via bank cheque or bank transfer confirmed at the deed).
   • The notary or public officer reads and explains the deed and identifies the parties.
5. Registration and post-completion
   • The new ownership is registered at the Land Registry (Registo Predial).
   • The change is notified to the Tax Office (Finanças) to update the caderneta predial.
   • Utilities, condominium administration, and insurance are switched into the buyer's name.

How long does it take?

• A straightforward resale purchase can complete in about 4-8 weeks.
• If a mortgage, complex planning issues, or company structures are involved, it can take 2-4 months or more.
• New build or off-plan purchases can be staged over 12-36 months with payments linked to construction milestones.

What types of property ownership exist in Portugal?

Most property in Portugal is held as full ownership (propriedade plena), either as a standalone plot/building or under the horizontal property regime for apartments. You can also find rights such as usufruct, co-ownership and, in specific contexts, long-term lease or surface rights, which affect control, inheritance and taxation.

Main ownership structures

• Propriedade plena (full ownership)
  • You own the land and structures outright, subject only to legal restrictions and encumbrances.
  • Typical for villas, townhouses and standalone plots.
• Propriedade horizontal (condominium / apartment ownership)
  • Each unit (fraction) is individually owned plus a share of the common parts.
  • Regulated by the Civil Code and specific title constituting the horizontal property.
  • Common areas are managed by the condominium owners association (condomínio) with mandatory fees.
• Usufruct (usufruto)
  • One person has the right to use and enjoy the property, while another owns the bare title (nua propriedade).
  • Common in estate planning and intergenerational transfers.
  • Ends on the death of the usufructuary or at a fixed term.
• Co-ownership (compropriedade)
  • More than one owner shares fractions of the same property (e.g. 50% each).
  • Decisions often require unanimity or qualified majorities.
  • Useful for family or investment structures but can cause deadlock if relationships sour.
• Surface rights (direito de superfície)
  • Right to build and own structures on land owned by another party for a long period.
  • Used in some public-private developments and corporate structures.

Buying through a company vs personal name

• Properties can be owned by:
  • Individuals (resident or non-resident), or
  • Portuguese or foreign companies (often Lda or SA).
• Owning through a company can have corporate and international tax implications, particularly if the company is in a blacklisted jurisdiction; higher IMI and other penalties may apply.
• For most private buyers, especially B2C, personal ownership is simpler and more transparent.

What taxes and purchase costs apply to Portuguese real estate?

Buying real estate in Portugal triggers IMT transfer tax, 0.8% stamp duty, notary and registration fees, and usually legal and agency costs. After purchase, you pay annual IMI property tax, possible AIMI high-value property tax, and income tax on any rental income.

Main one-off purchase costs

As a rule of thumb, most buyers should budget 7% - 12% of the purchase price for taxes and transaction costs, depending on the price, property type and whether they use financing.

How is IMT calculated?

• IMT is calculated on the higher of:
  • Transaction price in the deed, and
  • Tax value (Valor Patrimonial Tributário - VPT) in the caderneta predial.
• Rates differ for:
  • Urban property for permanent residence.
  • Urban property as second home or investment.
  • Rural property (flat 5%).
  • Commercial or building land (flat 6.5%).
• The Tax Authority publishes updated IMT tables annually; your lawyer or notary will calculate the exact amount before the deed.

Ongoing property taxes

• IMI (Imposto Municipal sobre Imóveis)
  • Annual municipal property tax, based on VPT.
  • Common rates:
    • Urban property: approx 0.3% - 0.45%.
    • Rural property: 0.8%.
  • Each municipality sets its own rate within national limits.
  • Paid typically in 1-3 instalments per year.
• AIMI (Adicional ao IMI)
  • An additional tax on higher-value residential property or land.
  • Applies if the total VPT of qualifying properties per taxpayer exceeds certain thresholds (e.g. EUR 600,000 for individuals, doubled for married couples who opt for joint assessment).
  • Rates are progressive starting around 0.7% for individuals.

What due diligence should you do before buying property in Portugal?

Before buying in Portugal, you should verify ownership, encumbrances, planning status, licences, taxes and condominium issues, and ensure the property matches what is registered. Skipping or rushing these checks is the main cause of serious disputes and unexpected costs.

Core legal and registry checks

• Land Registry (Registo Predial)
  • Obtain an up-to-date certificate (certidão do registo predial / certidão permanente).
  • Confirm:
    • Who owns the property, and how.
    • Mortgages, liens, seizures or rights of third parties.
    • Property description and area.
• Tax records (Caderneta Predial)
  • Issued by the Tax Office (Finanças).
  • Shows:
    • Tax identification of the property (article numbers).
    • VPT for IMI and IMT calculations.
    • Classification as urban, rural or mixed.
• Municipal licences and planning
  • For urban property, check with the Câmara Municipal:
    • Habitation licence (licença de utilização) or certificate of non-necessity for older properties.
    • Building permits and planning approvals for extensions, pools or renovations.
    • Any pending infractions or legalisation processes.
  • For land, verify buildability, zoning, infrastructure obligations and any protected status.

Physical and technical checks

• Verify that the actual property matches the plans and registry:
  • Number of floors, rooms and constructed area.
  • Outbuildings, terraces, pools and annexes.
  • Access rights and boundaries.
• Order a technical survey or inspection, especially for older rural houses and properties built before modern standards.
• Check for illegal works; these can block mortgages and cause fines or demolition orders.

Financial and condominium checks

• Condominium (for apartments or gated communities):
  • Request:
    • Condominium regulations and internal rules.
    • Minutes of recent assemblies (typically last 2-3 years).
    • Proof that the seller has no outstanding condominium debts.
  • Ask about planned extraordinary works and their projected cost.
• Debts and utilities
  • Confirm payment status of IMI, water, electricity and gas.
  • Although personal debts do not transfer automatically, some practical issues can arise if accounts are not regularised.

Common red flags

• Owner does not match the Land Registry or is in the middle of succession procedures.
• Significant discrepancies between actual construction and what is licensed or registered.
• Unregistered extensions or pool, or lack of habitation licence where one is required.
• Very low declared price compared to market value, which exposes you to tax investigations and penalties.

How does the buying process differ for non-residents and foreign buyers?

Non-residents and foreign buyers can freely buy property in Portugal, but they must obtain a NIF, go through stricter identity and source-of-funds checks, and sometimes navigate language, banking and tax residency issues. The legal steps are broadly the same, yet the practical risks are higher if you do not have local representation.

Key requirements for foreign buyers

• Portuguese tax number (NIF)
  • Mandatory for signing contracts, paying taxes, opening a bank account and connecting utilities.
  • Obtained from the Tax Office (Finanças) or via a representative, often within a few days.
  • Non-EU residents usually must appoint a tax representative in Portugal.
• Banking and payments
  • Opening a Portuguese bank account is often required for mortgages and convenient for running costs.
  • Banks apply anti-money-laundering checks and require documentation on income and source of funds.
  • Use regulated currency exchange providers where appropriate, especially for large transfers in other currencies.
• Language and representation
  • Contracts may be in Portuguese only; you have the right to request a translation, but the Portuguese version usually prevails.
  • Many foreign buyers grant a power of attorney to a lawyer to sign documents and handle registrations on their behalf.

Residence and visa aspects

• Buying property does not automatically grant residence rights.
• The popular "Golden Visa" route via property investment has been largely closed for new real estate investments, with exceptions in some contexts; immigration regimes are changing and require specialist advice.
• Owning a property can, however, support certain residency applications by showing accommodation and connections to Portugal.

Tax residency and reporting

• You can be a non-tax-resident owner but will still owe Portuguese tax on local rental income and possibly on capital gains upon sale.
• Portugal has been reforming special tax regimes (such as the former NHR), so you should coordinate cross-border planning with advisors in both Portugal and your home country.

How are mortgages and financing structured in Portugal?

Portuguese mortgages are typically euro loans secured on the property, often at variable rates linked to Euribor plus a bank margin. Banks will lend to residents and non-residents, but non-residents usually face lower loan-to-value ratios and stricter affordability criteria.

Typical mortgage terms

• Loan-to-value (LTV)
  • Residents: often up to 80%-90% of purchase price or valuation, whichever is lower.
  • Non-residents: commonly capped around 60%-70% LTV.
• Interest rates
  • Variable rate: Euribor (e.g. 6 or 12 months) plus a fixed spread set by the bank.
  • Fixed or mixed rates exist for specific periods, depending on the bank.
• Term and age limits
  • Typical duration: 20-40 years, with maximum age at maturity (often 70-75 years).
• Security
  • First-ranking mortgage over the property.
  • Often life insurance and property insurance assigned to the bank.

Additional costs of financing

• Bank arrangement fees and valuation costs.
• Stamp duty on the mortgage amount (commonly 0.6% for long-term loans).
• Extra legal and registration fees associated with the mortgage deed.

How are ongoing property taxes and condominium fees calculated?

Ongoing ownership costs in Portugal mainly consist of IMI annual property tax, possible AIMI for higher-value portfolios, condominium fees for shared buildings, and utilities and insurance. These vary widely depending on location, property type and value.

IMI property tax

• Based on the VPT, which is calculated using construction area, location, age and use factors.
• Each municipality sets its IMI rate annually within legal bands, often around:
  • 0.3% to 0.45% for urban property.
  • 0.8% for rural property.
• IMI is payable by the person who owns the property as of 31 December of the previous year.

Condominium fees

• Calculated based on the fraction's share (permilagem) of the building's common parts.
• Cover:
  • Cleaning, electricity and maintenance of common areas.
  • Insurance of the building structure (often obligatory).
  • Management and administration costs.
  • Reserve fund for future works.
• Fees are usually paid monthly or quarterly; extraordinary contributions can be approved for major works like elevators, roofs or facades.

Other recurring costs

• Property insurance (mandatory with mortgages and strongly advisable otherwise).
• Utilities and local service charges (garbage, sewerage).
• If you rent out, costs for accountant or tax representative, and tourist taxes if you are in local lodging (Alojamento Local).

What should you know about renting out property in Portugal?

If you rent out property in Portugal, you must comply with tenancy laws for long-term rentals or tourism and local lodging rules for short-term stays. Rental income is taxable in Portugal, with different treatment for residents and non-residents.

Long-term residential rentals

• Governed mainly by the Civil Code and the Urban Lease Regime (NRAU - Novo Regime do Arrendamento Urbano, Law 6/2006 and amendments).
• Contracts must be in writing and usually specify:
  • Duration (fixed term or open-ended).
  • Rent, payment terms and indexation mechanism.
  • Responsibilities for maintenance and utilities.
• Eviction and rent update rules are regulated and can be slower than in some other jurisdictions, so landlords must respect statutory procedures.

Short-term rentals and Alojamento Local (AL)

• Short-term tourist rentals are regulated as Alojamento Local.
• Requirements include:
  • Registration of the property as AL with the local Municipality.
  • Compliance with safety and equipment rules.
  • Display of registration number on booking platforms.
• Some cities, notably Lisbon and Porto, have introduced zoning, caps or suspensions for new AL registrations in certain areas; always check current local rules before relying on short-term rental income.

Tax on rental income

• Non-residents
  • Generally pay 25% flat tax on net rental income from Portuguese property, with limited deductions.
• Residents
  • Rental income is usually taxed as a separate category with specific rates and possible reductions depending on contract length and other conditions.
• AL income is treated as business income and can be taxed under simplified or organised accounting regimes, with different deduction rules.

When should you hire a lawyer or other expert for Portuguese real estate?

You should involve a Portuguese real estate lawyer in almost any purchase beyond a very low-value or low-risk transaction, especially if you are a foreign or non-resident buyer. A lawyer coordinates due diligence, negotiates contract terms, manages tax and registrations, and protects you from hidden legal and planning issues.

Situations where a lawyer is strongly recommended

• You are a non-resident or do not speak Portuguese fluently.
• The property has:
  • Unclear title history or old inheritances.
  • Unregistered extensions, pools or annexes.
  • Mixed urban and rural classifications or agricultural use.
• You are buying:
  • Off-plan or under construction.
  • Through a company or complex structure.
  • A large portfolio or development site.
• You intend to:
  • Rely on rental income (especially AL) or future development.
  • Integrate the property in an international tax or estate plan.

Other useful experts

• Real estate tax advisor for IMT, IMI, AIMI, rental and capital gains planning.
• Architect or engineer for structural surveys, licensing and renovation projects.
• Mortgage broker or bank advisor if you need financing.
• Property manager if you will not be in Portugal full-time or plan to rent out the property.

What are the next steps if you want to buy real estate in Portugal?

The practical next steps are to clarify your goals and budget, assemble a small team of local professionals, and then move methodically through due diligence, contract, completion and registration. Getting the sequence and documentation right at the start will save you significant time and money later.

Actionable checklist

1. Define your profile and strategy
   • Decide if the property is for own use, relocation, holiday home or investment.
   • Set a realistic total budget including 7%-12% for taxes and fees.
2. Put basic infrastructure in place
   • Obtain a Portuguese NIF (and tax representative if required).
   • Open a Portuguese bank account if appropriate.
   • Select a real estate lawyer experienced with your buyer profile.
3. Search and pre-screen properties
   • Work with reputable estate agents and cross-check listings.
   • Request key documents early: Land Registry, caderneta predial, licences, energy certificate.
4. Conduct full due diligence before committing
   • Have your lawyer review title, taxes, planning, and condominium information.
   • Commission a technical survey if appropriate.
5. Negotiate and sign the CPCV
   • Agree price, deposit, deadlines, and default penalties.
   • Align CPCV dates with any mortgage approval and your finances.
6. Prepare for completion
   • Secure mortgage offer if needed.
   • Arrange IMT and stamp duty payments.
   • Book deed date with notary and coordinate with seller and bank.
7. Sign the deed and register ownership
   • Pay balance of price and sign the deed (or your lawyer does via power of attorney).
   • Register the property and, if applicable, mortgage at the Land Registry and Tax Office.
8. Organise post-completion management
   • Switch utilities and condominium records to your name.
   • Put insurance in place and schedule IMI payments.
   • If renting, register contracts or AL licence and set up tax reporting.

Following this structured approach, with local professional support, will give you a much safer and more predictable experience when buying and owning real estate in Portugal.