Buying a House in Portugal: Complete Guide for Foreigners by RE/MAX
This special guide for foreigners equips readers with comprehensive knowledge and actionable insights to navigate the intricacies of property acquisition in Portugal effectively.
PROCESS OF BUYING A HOUSE IN PORTUGAL :
1. Get a Portuguese Tax Number (NIF)
2. Open a Portuguese Bank Account
3. Find a Property
4. Make an Offer
The offer should be in writing and should include the following information:
-The purchase price
-The terms of payment
-The closing date
5. Sign the Purchase Contract
If the seller accepts your offer, you will need to sign the Promissory Contract of Purchase and Sale (CPCV) and pay a deposit, typically 10% or more of the purchase price to secure your chosen property.
6. Pay the property Taxes and legal fees
7. Register the Property: The Deed
The final step is to register the property in your name. This will ensure that you have legal ownership of the property.
Info about the process: Process of Buying a House in Cascais, Portugal: Guide for Foreigners by RE/MAX Cidadela
DOCUMENTS NEEDED
To purchase a property in Portugal, you will need;
- A Portuguese tax number ( NIF) which can be obtained at the local tax office "Finanças" while you wait. You will need to provide proof of your identity as well as proof of address to apply for one.
-Passport
TAXES AND EXPENSES
Property Transfer Tax (Imposto Municipal sobre Transmissões, IMT)
The amount of IMT that must be paid is based on the value of the property and the type of property.
For residential properties, the IMT rate is progressive, starting at 0% for properties worth less than €101.917 and increasing to 7.5% for properties worth more than €1.102.020. If you’re buying a holiday home, you’ll need to pay an additional 1% of the first €101.917
Stamp Duty (Imposto do Selo)
For property purchase contracts, the Stamp Duty rate is 0.8%.
Property Tax (Imposto Municipal Sobre Imoveis IMI)
Property Tax (IMI) is a tax that is paid annually on the value of property. In Portugal, The IMI rates for residential properties range from 0.3% to 0.8%.
In addition to the taxes mentioned above, there are a few other taxes that foreigners may need to pay when purchasing property in Portugal. These include:
• Registration Tax (Imposto de Registo): paid on the registration of the property in the Land Registry.
• Notarial Fees:
• Legal Fees: These fees are paid to the lawyer who is responsible for advising the buyer on the legal aspects of the property purchase.
THE PORTUGUESE NON-HABITUSL RESIDENT SCHEME
New tax residents of Portugal can obtain a special tax status; The Portuguese Non-Habitual Resident (NHR) Scheme that provides several tax benefits to eligible individuals who become tax residents in Portugal. One of the primary benefits of the NHR Scheme is the exemption from taxation on most foreign income for a period of ten consecutive years
It allows paying a flat tax instead of a progressive one:
-20% for highly qualified professionals whom a Portuguese company employs
-10% for retirees who get pensions from another country
This system ends in late 2024
HOW TO FINANCE THE PURCHASE OF A HOUSE IN PORTUGAL
In the process of acquiring a house with a mortgage loan, it is crucial to consider several important issues:
-Purchase Value and Financing: The amount you can purchase depends on your savings, available financing, and monthly payment capacity.
-Property Down Payment and Financing: Banks typically finance between 80% and 90% of the property value for residents, and 60% to 80% for non-resident foreigners. It is also necessary to consider other associated expenses.
-Debt Capacity: It is essential to calculate your debt capacity, considering total monthly income and debts. The debt-to-income ratio should not exceed 35%.
-Choice of Interest Rate: There are options for fixed, variable, and mixed interest rates. The choice depends on the individual's preference and financial situation.
-Loan Term: The loan term affects monthly payments and total interest paid. Maximum terms vary according to age and residency.
-Associated Insurance: In addition to home insurance, banks often require mortgage life insurance.
-Professional Advice: The process can be complex, so seeking advice from credit intermediaries and real estate consultants can facilitate the transaction. At RE/MAX Cidadela, we have Maxfinance, which offers guidance and free simulation services to help find the best loan conditions.
Finance your property in Portugal
COST OF LIVING IN PORTUGAL
According to the 2023 Cost of Living study by the consultancy Mercer, Lisbon was ranked the 117th most expensive city for expats in the world ranking, while São Paulo ranked 152nd. In the same study, considering only European cities, Lisbon ranked 39th.
Food
Food is relatively affordable in Portugal. A meal at a restaurant costs an average of €15. At a more expensive restaurant, the bill can range from €40 to €60.
Food at supermarkets is also affordable. A couple spends an average of between €300 and €400 per month on groceries.
Education
Public education in Portugal is free for all students up to the age of 18. However, foreigners who are not Portuguese citizens may have to pay tuition fees at public universities. Private nurseries in Portugal cost between €350 and €500 per month.
Healthcare
The public healthcare system in Portugal is free for Portuguese citizens and for legal residents.
Private health insurance can vary between €35 and €100 per person, depending on age and the services that are covered.
Accommodation
Accommodation is the most significant cost for most people living in Portugal. The price of accommodation varies depending on location, size of property, and type of property.
Other costs to consider in Lisbon and Cascais:
Rent: A 1-bedroom (T1) apartment costs between €900 and €1,200, and with 2 bedrooms (T2) between €1,400 and €2,000. On average, rent in Lisbon costs €20.7 € per square meter
Electricity: Energy is relatively affordable in Portugal. A monthly electricity bill for a medium-sized house costs between €35 and €90, depending on the time of year and the type of heating.
Info about Cost of Living in Cascais
If you want information about Schools access here International Schools in Cascais & Lisbon
Explore here our free Guide with everything you need to know to buy a house in Portugal : GUIDE FOR BUYERS IN PORTUGAL
A RE/MAX CIDADELA é uma agência de referência internacional com mais de 30 agentes. Desde o ano 2004 a trabalhar na linha de Cascais, Lisboa e Sintra. Todos os anos estamos entre as melhores 30 agências, numa rede com mais de 400 agências em Portugal, sendo vários anos premiados como a Best Single Office em Cascais e Oeiras. Mais de 4.500 clientes já compraram ou venderam o seu imóvel com a RE/MAX CIDADELA
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