Buying property in Portugal as a foreigner

Gabriela Peratello
16.12.21
7 minute read

With warm weather, beautiful beaches and friendly communities, Portugal is a popular destination for expats looking to relocate or invest.

If you’re thinking of taking new property opportunities, read along to find everything you need to know about buying a house in Portugal as a foreigner.

📑 Table of Contents

What’s the property market like in Portugal?

Due to a steady growth in property prices since 2014, Portugal’s housing market remains strong. Though, recently the price increase has been attenuated due to the impact of Covid-19 on the country’s economy¹.

With the world starting to open up again for tourism and the demand from foreign investors increasing, the market should soon pick up again both in buying activity and property prices.

This means that now is a time as good as any to go after your new house, be it a holiday home, or to follow your plans to join the growing expat communities in Portugal.

Can Americans buy property in Portugal?

There aren’t any special restrictions for foreigners to buy property in Portugal. This means that US citizens can freely buy houses in the country.

Portugal is also known for incentivizing foreign investment, with programs such as the Golden Visa², which grants up to 5 years permanent residency — after which you’ll be able to apply for citizenship.

The eligibility for this type of visa is conditioned to investing at least 500,000 EUR for your property, or down to 280,000 EUR depending on the region³.

Make sure to check all the relevant government websites after your purchase, to make sure you fall into the eligibility criteria.

How to buy real estate in Portugal as an American: step by step

portuguse-homes-castle-view

Once you’ve set your budget and chosen your property, you can go over the steps below on how to buy a home in Portugal⁴:


Step 1. Decide which mortgages might suit you, and get an offer in principle so you have a budget in mind

Step 2. Engage an independent solicitor to help check contracts and make sure the property is surveyed, once that is done, you can make an offer to the seller.

Step 3. Sign the Contrato de Promessa de Compra e Venda (sales contract) with the notary — that’s usually when you pay for your deposit, which ranges from 1% - 10% of the purchase price.

Step 4. You're now liable for property transfer tax (Imposto Municipal sobre Transmissões)

Step 5. The last step is to sign the Escritura Publica de Compra e Venda (Deed of Purchase and Sale) and have the property registered in your name — this is when the remainder is to be paid.


What are the requirements to buy a house?

The overall process of – is pretty straightforward, so you just need to make sure you have all the necessary documents, such as⁵:

  • ID document with photo
  • A Portuguese tax number (NIF) which can be requested at the closest Loja do Cidadão
  • The energy certificate for your new property
  • The Imposto de Selo (stamp duty)
  • The Caderneta Predial (land register)
  • Your mortgage agreement

Buying property in Portugal as a foreigner: costs

If you’re thinking of buying a property in Portugal, the price you pay will be influenced significantly by where you want to live.

While Lisbon is the most sought after location, you can find houses with more reasonable prices along the Algarve coast, in cities like Faro and Albufeira.

But Portugal has properties to offer for every kind of pocket, so make sure to check your options and pick the one that best suits your needs.

Below you can find some average prices to help you get started:

LocationPrice (sqft) in city centerPrice (sqft) outside of city center
Lisbon⁶482.19 USD283.33 USD
Porto⁶301.42 USD176.85 USD
Coimbra⁷224.68 USD140.60 USD
Faro⁸226.03 USD164.58 USD
Albufeira⁷256.55 USD204.75 USD
Cascais⁸597.89 USD319.00 USD
Average Price348.13 USD214.80 USD

What kind of taxes and fees will you need to pay?

Other than the property price on itself, as a buyer you’re liable to certain taxes and fees over what you’re purchasing.

Below you find a breakdown of the most common fees you’ll need to pay.

🏡 Fees and taxes include⁹
Stamp duty
    0.8%
Legal fees
    1%-2%
Notary and registration fees
    0.2% - 1.2%
Property transfer tax (Imposto Municipal sobre Transmissões - IMT)
    This is calculated on a sliding scale depending on the cost of the home.
    It’s only applicable for houses that cost more than 92,407 EUR
Exchange rate
    Variable
    Make sure to get the most EUR from your USD by using Wise, a cheap and transparent way of moving your money abroad.

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Getting a mortgage in portugal as a foreigner

Portugal has a sophisticated banking system with plenty of choice in local and international banks. The largest banks include Santander, Novo Banco, BBVA and Bankinter. You might recognise the brands as many have a global presence.

For example, global banking giant Santander has a Portuguese operation, offering many of the same accounts and deals that you can get elsewhere in the world. If you have an account with them already, you may find it easier to switch to their local business in Portugal.

It’s advisable to get a mortgage agreement while you’re still at the beginning of your property purchase process. This will give you a more realistic idea on your budget, and will also help to avoid any complications down the road.

Can expats get a mortgage in Portugal?

Yes, it’s possible for expats to get a mortgage in Portugal. The only difference you’ll face is that when it comes to financing, banks usually offer loans between 65% - 75% of the purchase price for foreigners¹⁰.

If you’re in need of a larger percentage for your loan, it might be worth checking your local options of international mortgage lenders.

How much deposit do you need for a mortgage in Portugal?

When it comes to deposits, the minimum should be approximately 20% of the full property price¹¹.

After the documentation is done, you’re expected to pay your fees. Besides the deposit, the commitment fee is usually applicable and it will cost you around 600 EUR.

Have in mind that, depending on the bank you choose to follow through with, other fees and taxes might be applicable, so make sure you do your research before making any commitments.


Buying property abroad? Send money the hassle-free way with Wise

Now that we covered all the basic costs of purchasing your dream Portuguese home, the only question left is: how to send money to pay for your property overseas?

Wise offers you a quick, secure and transparent way of sending money to Portugal . You get the mid-market exchange rate for your payments and see how much it’s charged for the transfer before sending the money from your bank.

With the Wise Multi-currency Account you can also hold, send and spend money in over 50 countries, and receive like a local in 10 different currencies.

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How can you find real estate in Portugal?

There are several avenues you can take to find a property in Portugal:

  • Through an agent (imobiliaria)
  • Through an online portal which puts sellers in touch with buyers directly
  • Through word of mouth.

An estate agent, if used, generally works on behalf of the seller. The estate agent fees are likely to be between 3% and 5% of the price of the property, and will be covered by the seller.

🌐Here are some websites to help you get started
Century 21This site has English language ads, and can be accessed simply using their app
Proper StarEnglish language website that offers a range of properties, you can filter by country and city
ERAIn this Portuguese real estate website you can sort by property type and location

Avoiding scams and pitfalls

To avoid scams and pitfalls, make sure your chosen realtor is properly registered. All agents have to be registered with the proper body (known as the Associação de Mediadores Imobiliários) and hold a licence number. Check out your agent’s credentials by talking to the Instituto da Construção e do Imobiliário (the body responsible for construction and realty).

When it comes to finding your own independent solicitor it’s also important to do your research carefully. You should know that there are both professionals known as a solicitador and an advogado in Portugal.

A solicitador is a conveying specialist, and an advogado is a qualified lawyer. In most cases, an advogado, although more expensive, will be the better choice when arranging your house purchase. Don’t feel you have to take the recommendation of your broker or the seller — your lawyer will work for you, so you must find someone who you’re comfortable with.

How to choose the right property

portuguese-house-windows

Property types

You'll have a wide choice of apartments, houses or even land if you want to build your dream home in Portugal yourself. Naturally, you'll find more flats available in built up areas and cities, with houses and villas more readily available in newer developments in the suburbs, and in towns and villages.

The recent rise in house prices has fuelled new construction in the cities and the coastal areas along with Algarve in particular, and you'll find a good mix of older properties and new-build condos there.

Condition of the property

It’s a smart idea, though not required by law, to get a survey done on any property you choose, before you commit to buying it. Older houses in particular can have hidden problems which are costly to fix. Your solicitor can help you find a registered surveyor.

Other things to look out for

You must have a fiscal number (Numero de Contribuinte) to purchase a property in Portugal. You can get this through the local tax office or it's issued when you open a local bank account.

💰 Get EUR details to send, receive and spend like a local even before moving to Portugal from the USA.

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Multi-currency Account

What are the legal requirements of buying property in Portugal?

The notary works as a middleman on behalf of the state, and has an extremely important role in house sales in Portugal. He’ll check the Land Registry (Conservatória de Registo Predial) and Inland Revenue (Repartição de Finanças)


Now that we’ve been through all the steps of buying a house in Portugal, you can take your plans off the paper and go after your dream home abroad.

And don’t forget to get a Wise Account, this way you’ll have one less thing to worry about when settling in a new country.


Sources:

  1. Global Property Guide - Portugal price history
  2. Get Golden Visa - Portugal residence by investment
  3. Get Golden Visa - Portugal golden visa program
  4. Proper Star - How to buy a house as a foreigner
  5. Get Golden Visa - Buying property in Portugal
  6. Numbeo - Price comparison: Lisbon and Porto
  7. Numbeo - Price comparison: Coimbra and Albufeira
  8. Numbeo - Price comparison: Faro and Cascais
  9. Global Property Guide - Buying guide
  10. Expatica - Mortgages in Portugal
  11. Everything Overseas - Portugal mortgages

Sources checked on 12.16.2021


This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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