When you’re considering buying a property in Portugal, it’s essential to be aware of the costs involved. Understanding how much you’ll need for charges such as the notary and taxes, ensures you can plan for a smooth property purchase.
Portugal is an increasingly popular destination for foreign buyers seeking a second home, a vacation property, or even a retirement spot. Known for its mild climate, beautiful landscapes, and affordable cost of living, Portugal offers a wide range of properties across vibrant cities, stunning coastal areas, and peaceful rural regions. However, before you take the plunge and purchase property, it’s crucial to understand the full scope of costs involved.
This article will break down the various expenses and help you plan for a smooth property purchase in Portugal.
Before the purchase
Moving abroad is a significant decision that can be a financial strain if you don’t budget correctly.
One of the key factors in managing the costs is choosing the right location. Before making any decision of purchasing, you should visit different areas of Portugal as often as possible, to decide where’s best for your situation.
If you’re moving with your family, you might want to be close to international schools and the conveniences of city life, such as Lisbon. For those looking to enjoy retirement, the Algarve might be an ideal choice for its beautiful villas and relaxed atmosphere. Alternatively, you may be planning to invest in a holiday home and want to know the buying costs for properties in Portugal in different regions.
Whatever your reason for wanting to know the costs of buying property in Portugal, you’ll need to factor in travel, accommodation and food for your research trips.
You should also check that all passports are up-to-date and renew them if necessary. The current regulation for UK citizens entering Portugal requires the passport expiry date to be 3 months after leaving the country.
The cost of a UK passport can be found in this article (link). If you already live abroad and need to apply for or renew a passport, you must apply via the MyBritishPassport portal.
During the purchase
Once you’ve decided where to settle in Portugal according to your passions and lifestyle, it’s time to move forward with the purchase.
Property cost
Below is a breakdown of the average cost of property in Portugal per square metre by region, to help you make a decision.
| Region | Purchase Price (€/m²) |
|---|---|
| Portugal (National Avg.) | 2,622 |
| Lisbon Metropolitan Area | 3,644 |
| Algarve | 3,334 |
| Madeira | 3,003 |
| North | 2,168 |
| Alentejo | 1,507 |
| Azores | 1,485 |
| Centre | 1,448 |
Property prices in Portugal are generally more affordable than in the UK. The average price per square metre in the suburbs in Portugal is currently €2,476, compared to €3,806 in the UK.
Prices are slowly increasing. With October 2024 showing a 12% increase year-on-year, now it is the right time to buy property in Portugal and start planning.
Residence permit
If you plan to stay and buy property in Portugal for over three months, you’ll need to apply for a residence permit, which is free of charge and can be obtained from your local tax office.
Transfer tax (Imposto Municipal sobre as Transmissões Onerosas de Imóveis – IMT)
This is a variable tax calculated based on the property’s purchase price and its intended use (primary or secondary residence). The rates range from 0% to 8%, depending on the value of the property. In 2024, the taxes for a main homes were:
| Property Value | Tax rate |
|---|---|
| Properties up to €101,917 | 0% |
| Properties between €101,917 and €139,409 | 2% |
| Properties between €139,409 and €191,268 | 5% |
| Properties between €191,268 and €258,962 | 7% |
| Properties between €258,962 and €336,038 | 8% |
| Properties above €336,038 | 6% |
Notary fees
You must use a notary in Portugal to legally validate the property purchase. Notary fees are typically between €500-€1,000, depending on the complexity of the financial transaction.
Lawyer fees
Although not compulsory, as the notary handles the finance transactions, you can also appoint a lawyer. While this is one of the additional property buying costs in Portugal, and you may feel you don’t want to pay it, engaging a lawyer is highly recommended. They will check for any legal issues with the property, which is not the responsibility of the notary. This could save you potential headaches and unnecessary charges in the future.
Land registry
A cost of buying property in Portugal to ensure the boundaries, owner and other features are legally registered is the land registry. This costs €225 online and €250 in person, and will be arranged by the notary.
Stamp duty (Imposto do Selo)
Stamp duty is one of the compulsory buying a property in Portugal costs, charged at a fixed rate of 0.8% of the property’s purchase price. It is payable when you sign the deed of sale at the notary’s office.
VAT
There is no VAT to pay on resale properties (i.e. previously owned homes).
For new properties purchased directly from developers, VAT is 6% of the purchase price, down from 23% in 2024, a temporary measure, by the Portuguese government to encourage the purchase of new builds.
Mortgage fee
If you apply for a mortgage, the bank will charge a fee, depending on the size of the loan. This will be detailed when the mortgage offer is made.
Agency fees
This fee varies between 5% and 10% of the sale price.
Iad Overseas have access to a vast number of property agents all over Portugal with experience and professional knowledge of the market.
After the purchase
Buying a property in Portugal costs also include the ongoing expenses, once you’ve bought your property in Portugal. If it’s your main home you’ll have utility and maintenance expenses to pay, plus the annual property and waste taxes (similar to UK council tax).
In addition to the above, if you decide to rent out the property you will have to pay tax on the income and allow for any emergency repairs.
3 key points to remember
- Now is a good time to buy in Portugal, as prices are steadily rising.
- The notary does not check the legal aspects of a Portuguese property purchase so, it’s important to hire a lawyer.
- Budgeting for all the associated costs of buying a property in Portugal will ensure you remain in control of your finances.
Ready to buy a property in Portugal? Contact us for all the advice and guidance you need.
- https://www.ukabroad.net/british-passport-expiry-date/
- https://www.gov.uk/passport-fees
- https://mybritishpassport.com/can-i-go-to-the-british-embassy-to-renew-my-passport-from-abroad/#:~:text=No%2C%20British%20passport%20renewals%20from,abroad%20with%20MyBritishPassport%2C%20click%20here
- https://www.gov.uk/guidance/living-in-portugal
- https://www.statista.com/statistics/1469357/portugal-sale-square-meter-price-by-region/
- https://www.numbeo.com/cost-of-living/compare_countries_result.jsp?country1=United+Kingdom&country2=Portugal
- https://vistos.mne.gov.pt/en/national-visas/general-information/fees
- https://www2.gov.pt/en/cidadaos-europeus-viajar-viver-e-fazer-negocios-em-portugal/viver-em-portugal/compra-e-venda-de-imoveis-em-portugal-cidadaos-europeus-
- https://www.sef.pt/pt/Pages/homepage.aspx
- https://justica.gov.pt/Servicos/Pedir-registo-predial#Quantocusta
- https://www.taxathand.com/article/34497/Portugal/2024/Updates-regarding-VAT-rate-for-housing-construction-tax-on-non-alcoholic-beverages
