The buying process in Portugal

Here’s a quick guide to the process. At the appropriate time, we can discuss any aspect of this in detail with you.

In this section, we'll talk about:

The Reservation Deposit

Choosing Your Lawyer

Searches, Checks and Diligence

Private Purchase Contract

Stage Payments

Completion

Taxes and Fees

Reserving your property with a deposit

Once you’ve found your dream home in the sun, you pay a reservation deposit of typically €5,000. This fixes the price that you will pay and removes the property from the open market.

Appointing a lawyer

You will need to appoint a lawyer and it's important that you use a lawyer who fully understands Portuguese conveyancing law and we can introduce you to several if you don't have one sorted out yourself.

Searches and checks

Your lawyer has around a month to undertake all the necessary searches, legal checks and to agree/draw up a contract. This includes searches/checks at the local municipality to check the title, at the land registry (Conservatoria de Registo Predial) and also at the equivalent of HMRC (Tax Office) (“Repartição de Finanças” in Portuguese).

You’ll also need a (Numero de Contribuinte) fiscal number which your lawyer will obtain for you. This is required for most transactions of this type in Portugal.

Private Purchase Contract

About four weeks after lodging your reservation deposit, and having signed the purchase contract (promissory contract), you pay your first stage payment, which is typically 20% - 30% of the purchase price.

Your lawyer will explain everything about the contract to you and will make sure you fully understand what you will have to pay and when each payment becomes due.

With resale properties, completion is normally targeted for 28 day’s time but by agreement, this can be shorter or longer.

Stage Payments

With properties that are still to be constructed, a schedule of further stage payments may be agreed in advance with the final balance due on completion. Alternatively, some developments will not require additional stage payments after paying your first stage payment, just the balance on completion.

Briefly, here are the various stage payments:

Reservation Deposit - €5,000 to secure your property
First Stage Payment - 20% - 30% after 30 days
Further Stage Payments - as agreed with the constructor
The Balance (plus fees, taxes) - on completion

Completion

Completion takes place in the notary’s office and both the buyer and seller must be present. However, if you prefer, you can give your lawyer power of attorney, so that he can complete and sign the paperwork on your behalf.

Following completion, a title deed for the property will be issued in your name. This can take several months in Portugal.

Don’t forget too, that it would be prudent to make sure you have adequate building and contents insurance cover in place ready for when you take legal possession. And, if you have a mortgage, organise life assurance, too.

Fees and Taxes

Our property prices are quoted excluding VAT - 21% in Portugal.

Here's a guide to the fees and taxes you'll have to pay when purchasing your Portuguese property:

VAT - 21%
Legal fees – around 1.5% of the purchase price
Stamp Duty and Notary fees – around 2.5% of the purchase price
Mortgage arrangement fees – vary according to mortgage product used
Municipal property tax: between 0.2% to 0.5% on new properties; 0.4% to 0.8% on old ones. This is based on the rateable value of the property.
Purchase Tax (IMT) - On a sliding scale up to 6% on properties over €532,700 but non payable on properties below €83,500. See the purchase tax table below.

Overall, budget around 30% to 35% more than the cost of the property to cover your buying costs. Fees and taxes can vary depending on the municipality, and your lawyer should check the relevant and current legislation.

Purchase Tax Table

Property Value	Gross Tax %	Amount to Subtract From Gross Tax
up to € 83,500	0%	-
€83,500 to €117,200	2%	€ 1,710
€117,200 to €159,800	5%	€ 5,226
€159,800 to €266,400	7%	€ 8,422
€266,400 to €532,700	8%	€ 11,086
over €532,700	6%	-