Whether you’re dreaming of a coastal villa or a countryside escape, buying property in Portugal is a straightforward process—with the right guidance. Here’s a step-by-step breakdown of how it works for non-Portuguese buyers, including key costs and legal considerations.
🏠 Buying Privately Owned Property
Step 1: Letters of Intent
- Once the buyer and seller agree on terms, each signs a non-binding Letter of Intent.
- This outlines the main deal points and is shared with both parties’ lawyers to begin the legal process.
Step 2: Legal Due Diligence
- The buyer’s lawyer checks all property documents.
- They ensure the property is free from debt, properly registered, and legally available for sale.
Step 3: Promissory Contract (Contrato Promessa de Compra e Venda)
- A binding agreement is signed between buyer and seller.
- The buyer pays a standard 10% deposit, usually held by the buyer’s lawyer.
💡 Withdrawal Clauses:
- If the seller backs out, they must return double the deposit.
- If the buyer withdraws, they lose the deposit.
Step 4: Final Deed (Escritura)
- Signed at a notary’s office, this officially transfers ownership.
- The buyer pays the remaining balance and applicable taxes.
- The buyer’s lawyer updates the Land Registry and transfers utilities.
🔑 Can’t be there in person? You can grant your lawyer power of attorney to act on your behalf.
💰 Typical Costs When Buying Privately Owned Property
- Legal Fees: Usually between 1–2% of the property value
- IMT (Property Transfer Tax):
- 6%: Properties between €621,501 and €1.12 million
- 7.5%: Properties over €1.12 million
- 6.5%: Construction plots or non-residential buildings
- 5%: Rural land
- 10%: If bought via offshore jurisdictions on the blacklist (e.g., Gibraltar, Mauritius)
- Stamp Duty: 0.8% of the purchase price or the official property value (whichever is higher)
- Notary & Registration Fees: Around €2,000–€2,500
🏢 Buying Property Held in a Corporate Structure
Some properties in Portugal are owned via companies, and in this case, you’ll be buying shares in that company.
Step 1: Letters of Intent
- Similar to a private purchase, non-binding letters are signed to confirm key terms.
Step 2: Extended Due Diligence
- The buyer’s lawyer checks both the property and the company that owns it.
- This includes reviewing:
- The company’s legal standing
- Any debts or liabilities
- Representation and warranties of the seller
Step 3: Share Purchase Agreement (SPA)
- A binding contract is signed and a 10% deposit is paid.
- This agreement outlines the full terms of the share transfer.
Step 4: Completion
- The buyer pays the remaining amount.
- The seller officially transfers the company shares to the buyer—often completed in English.
💼 Costs When Buying Through a Corporate Structure
- Legal Fees: 1–2% of the property value
- IMT: Not applicable for company share purchases
(Note: May differ if buying a second home under personal ownership) - Stamp Duty: Not applicable for non-resident companies
- Notary & Registration: Not required
- Property Manager/Administrator: Typically €3,000–€5,000 annually
🛡️ Understanding KYC (Know Your Customer)
To comply with international financial laws, you’ll need to complete KYC procedures, which involve:
- Verifying your identity and source of funds
- Declaring whether you or close connections are Politically Exposed Persons (PEPs)
- Sharing financial and personal documentation with your lawyer, agent, and/or bank
💬 It’s normal—expect to be asked for detailed information during the process.
✨ Extra Tips for Smooth Buying
- ✅ Be Transparent: Keep your personal or corporate documentation updated and accessible.
- ✅ Know Your Taxes: Budget ahead for IMT, Stamp Duty, and legal fees.
- ✅ Expect Questions: The vetting process (KYC) is routine but thorough.
Want help navigating your property purchase in Portugal?
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