Purchase and sale of real estate in Portugal (European citizens)
If you are an EU citizen and you want to buy or sell a property (e.g. a house, building or plot of land) in Portugal, you must comply with a number of legal obligations. From the offer to purchase agreement to the signing of the deed, taxes and insurance, there are a number of procedures to be followed.
- Intermediary agents for buying or selling a property
- How to get your Tax Identification Number (TIN) as a European citizen
- Legal documents relating to a property
- Offer to purchase agreement
- Charges and taxes on a property (including purchase and sale)
- How to finalise the purchase
One option for buying a property is to get financing from a bank. This involves obtaining a mortgage from one of several credit institutions (e.g. banks). The Bank of Portugal website has a dedicated page that helps you to compare the best options offered by the different credit institutions.
Pricing and valuation of the property
In Portugal, the value of a property is defined by the seller. If necessary, a valuation may be requested from a property specialist or advisor. When buying with credit, this valuation is normally carried out by the bank as a condition for obtaining a loan.
You can get professional advice from an estate agent, accountant or lawyer on the purchase or sale of a property.
The professional you choose can provide you with technical and legal support for the specificities of the Portuguese market. To this end, you can consult the following lists:
- Estate agents and consultants on the IMPIC website (Institute of Public Property; and Construction Markets)
- Certified accountants on the website ()
- Lawyers on the website ()
The TIN is simply a tax and customs number that can be requested by citizens at any time, allowing you to comply with the payment of taxes on the purchase or sale of a property.
In order to start the process of buying the property, you need to ensure that all legal documentation is correct. It is important to check the following documents:
- Property Description Document – Document issued by the Tax and Customs Authority containing the details of the property
- Abstract of title or Title search – Document issued by the Property Registry containing information on the location and composition of the property and the owners
- User Licence – Document issued by the respective Municipal Authority indicating whether the property has been inspected and is legally compliant
- Energy Certificate – Document issued by the National Energy Agency indicating the energy efficiency of the property
- Building Data Sheet – Document indicating the main technical and functional characteristics of the property
- Declaration of non-debt to the condominium – Document ensuring that there are no debts to the condominium
While buying a property, you may sign an offer to purchase agreement, but it is not compulsory. It is a document, duly authenticated by the seller and buyer, that sets out the rights and obligations of the parties involved. It must contain the following details:
- full name, civil status, civil identification number, tax identification number and address;
- property details;
- information regarding any liens or encumbrances on the property;
- purchase price, sale and form of payment;
- amount given as a deposit;
- the maximum time limit for concluding the final contract;
- information on penalties in the event of failure to comply with the offer to purchase agreement.
When you buy a property, you must take out insurance covering the risk of fire, flooding, theft and other damage and, possibly, coverage for adjoining common areas. Insurance coverage for adjoining common areas may be included in the monthly condominium payment.
When you use a mortgage to buy a property, financial institutions require you to take out life insurance and multi-risk insurance. The property is used as a loan guarantee.
When taking out insurance, it is important to take into consideration:
- the coverage;
- any excesses;
- the amount of capital insured;
- the premium paid.
Owning, buying or selling a property involves costs, where the tax component depends on your intentions.
Taxes payable on the purchase of a property
1. Municipal Property Transfer Tax (IMT) is calculated on the basis of the value set out in the deed or the taxable value of the property. It is levied on the higher of the two and depends on the location of the property (mainland or autonomous regions of Madeira or the Azores), its intended use (whether it is for your own permanent dwelling or a second home) and how it will be used (for housing, commerce, etc.). Specific cases of exemption from the payment of IMT are provided for by law.
2. Stamp duty (IS) is a tax levied on all transactions and contracts (deed and mortgage, if there is one). When buying a property, stamp duty of 0.8% is payable on the higher value between the acquisition price or the taxable value of the property. This tax must be paid by the buyer before the conclusion of the contract of sale.
3. Municipal Property Tax (IMI) applies to the taxable value of the property for urban and rural buildings. Each municipality is free to set its own rate for this tax. (Specific cases of exemption from the payment of IMI are provided for by law).
4. Personal Income Tax (IRS), where the purchase of the property takes place with money from the sale of another property, and this transaction has led to capital gains.
Exemptions from payment of taxes on the purchase of property
There are cases of exemption from payment of taxes, previously established by law, on the purchase of a property. Check when this is possible:
Taxes payable on the sale of a property
In the case of sale of a property, you always have to report the sale to the Tax Authority, and if there is a positive difference between the purchase price and the sale price of the property, it generates capital gains, which will be taxed.
Exemption from payment of capital gains
When a property is sold, in some cases there are exemptions from the payment of capital gains:
• when the purchase took place before 1 January 1989;
• where the sale value is used for the purchase of a permanent home within a maximum period of 36 months;
• when a loan exists, the sale value is used to settle the respective debt over a transitional period of 5 years and the seller does not own another house.
See the Tax and Customs Authority website for more information on capital gains.
Signing the deed for the property
The deed for the property is finalised when you sign a contract formalising the buyer as the legal owner of the property, either by means of a document drawn up at a notary office, a lawyer, a One-Stop Shop at a Property Registry or a Casa Pronta office (see below). It could also be via a certified private document, which is then legally communicated.
The documentation required is as follows:
• Civil and tax identification documents of the parties involved;
• Abstract of title of all annotations and descriptions in effect;
• Urban Property Description Document or application for registration of the property in the register (Model I of IMI), issued by the Tax and Customs Authority;
• User licence (in the case of buildings built after August 1951);
• Building Data Sheet (if the user licence was issued after 30 March 2004);
• Infrastructure Certificate (if property has a Plot Partitioning License registered since 1992, without provision of security and is the first transmission);
• Energy and Indoor Air Quality of Buildings Certificate;
• proof of payment of IMT;
• proof of payment of stamp duty;
• declarations Exercising the Right of Preference (if any);
• toponymic certificate (if any);
• a statement of the outstanding amounts of the loan for purposes of paying the loan (if any);
• offer to purchase agreement;
• declaration of payment of IMI (Municipal Property Tax).
When signing a contract, taxes must be paid for this service:
• stamp duty on the transaction: 0.8%
• stamp duty on the loan (if any and above EUR 5 000): 0.6%
• registration of the deed, to be carried out by a lawyer, at a one-stop shop of a Property Registry or any Casa Pronta office, or at a private or public notary office;
• payment of IMT, or, as can be seen in the table below, the amount to be paid is the value set out the in the deed or the taxable value of the property x the rate to be applied minus the amount to be offset:
|Taxpayer’s income||Rate||Amount to be offset|
|Up to EUR 92 407.00||0%||EUR 0|
|Over EUR 92 407.00 up to EUR 126 403.00||2%||EUR 1 848.14|
|Over EUR 126 403.00 up to EUR 172 348.00||5%||EUR 5 640.23|
|Over EUR 172 348.00 up to EUR 287 213.00||7%||EUR 9 087.22|
|Over EUR 287 213.00 up to EUR 574 323.00||8%||EUR 11 959.26|
|Over EUR 574 323.00||6%||0€|
Once the public deed has been signed, the purchase must be registered at the Property Registry.
The Casa Pronta service allows a number of matters relating to the purchase and registration of a building to be dealt with all together at the same place. When buying or selling a property, paying taxes, registering, etc., you can do everything at the same time.