There are no constraints imposed on foreign property purchasers in Portugal. Portugal is highly sought by foreign investors for real estate acquisitions, serving as either a vacation residence or a retirement asset.

Our expert lawyers will guide you through the procedure and protect your investment. PMCG team possesses extensive experience in dealing with a wide range of real estate in Portugal, providing advice on both commercial and residential investment purchases.

If you are looking forward to buy a property in Portugal, prospective purchasers must obtain a Portuguese taxpayer number, which necessitates being a taxpayer. This number can be acquired from a local tax office. If you are a non-EU citizen is required to appoint a professional as a tax representative in Portugal.

There is a range of property rights available, encompassing various methods of acquiring an interest in a property:

  • Surface right allows for the construction of a building on the land of a third party, with such rights being either permanent or time limited.
  • Usufruct: It provides the right to use and reside in a third party’s property for a specified period, allowing the beneficiary to enjoy and utilize the property akin to the owner.
  • Full ownership: It grants the exclusive right of possessing the freehold.
  • Right of use: It permits an individual to utilize a third party’s property for personal or familial needs.

Cost Associated with the Purchase

Aside from the property’s purchase price, the costs associated with property purchase include:

  • Imposto Municipal sobre Transmissões Onerosas de Imóveis (IMT), also known as the property transfer tax, which is paid by the purchaser upon the transfer of ownership of property in Portugal. The tax rate varies from 1% to 8%, depending on factors such as the purchase price, the property’s location, and whether it will be the prospective owner’s first or second home in Portugal.
  • Imposto de Selo, or Stamp Duty, which is levied at a rate of 8% of the purchase price.
  • Notary and Land Registry Fees, which typically range from 1% to 2% of the purchase price.

The Transaction

The process of property purchase in Portugal bears similarities to that in the UK. Prior to completing the transaction, meticulous due diligence is imperative for the purchaser to verify the property’s origin and the vendor’s right to sell. This entails ensuring there are no charges, tax debts, licenses, encumbrances, or other liabilities against the property. Information necessary for this due diligence can be obtained from authorities such as the Land Registry Office, although vendors often provide relevant documentation.

The ownership transfer is typically made via a public deed by a public or private notary, or an authenticated private document, which is then registered with the respective Land Registry Office. Special situations may require additional consent, such as when the property is part of a marital agreement.

Vendor warranties, governed by statute, pertain to the property’s condition and risks like asbestos. The vendor is prohibited from selling a property with defects that would hinder normal use and must disclose any encumbrances if claimed none exist. If discrepancies are discovered, the purchaser may seek a refund and pursue legal action to annul the sales and purchase agreement.

In Portugal there is a lack of a mandatory format for a sales and purchase agreement (SPA), affording parties flexibility in structuring the agreement. However, the document must be executed as a public deed or authenticated private document and registered with the Land Registry. PMCG lawyers ensure the agreement contains necessary provisions, such as a detailed property description, and oversee the required registrations.

For more information, contact us.