Real estate in Portugal: registration, documents, mortgage

Many investors prefer to purchase luxury real estate in the neighboring Kingdom of Spain. However, Portugal is in no way inferior to its neighbor. The points below compare Spain and Portugal real estate investment.

• When buying real estate for €500,000, you can apply for a European residence permit in a short time — a “golden” residence permit in Portugal.

• In just five years after being under the status of a residence permit, you receive Portuguese citizenship and become the owner of a country’s passport that is part of the European Union.

• The process of buying property here is simplified as much as possible, and taxes on home ownership are lower than in Spain.

• The price per square meter in resorts are on average €500‑600 cheaper than in Spanish ones.

• The cost of living in Portugal is below the European average and is suitable for most wealthy people.

• If you are not going to live in the country to get a residence permit for investment it is enough to stay in Portugal for at least 7 days a year.

• For holders of residence permits residing in the country, a special preferential taxation regime is provided.

Portugal has a mild climate with warm winters, dry summers and no uncomfortable heat. More than 250 days a year are filled with sunshine, beautiful nature, clean beaches, and a lot of entertainment.

English is widely spoken in the country, and it is enough to know Portuguese at an elementary level.

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Igor Buglo

Head of the Maltese office, MBA

The term for issuing a residence permit in Portugal by investment is 8 to 10 months. To obtain the status, one visit to the country is enough, which is to submit biometrics. At the same time, the entire investor’s family receives residence permit cards at no additional charge.

After five years, the investor can apply for a passport, and the presence of a “golden” residence permit gives a priority right to citizenship. At the same time, Portugal allows its citizens to have multiple passports, so investors do not have to give up their first citizenship.

Buying a property is the most popular option for obtaining a residence permit in Portugal by investment.

To become a Portuguese resident, you need to buy one or more residential or commercial properties worth at least €500,000. If you choose an object older than 30 years for renovation, then the amount of investment will be from €350,000.

For properties in areas with low population density, the amount of investment is reduced by 20%. New objects are allowed to be bought for €400,000, buildings for renovation — for €280,000.

You can learn more about prices, taxes and the cost of maintaining Portuguese housing in our review "Property in Europe".

Examples of properties in Portugal

Portugal, Albufeira

€1,400,000 — €4,500,000

Apartments and villas in a luxury resort managed by Marriott International

194 m² — 386 m²

3

3

Portugal, Lisbon

€860,000 — €2,500,000

Apartments in a hotel managed by Hyatt

88 m² — 251 m²

3

3

Portugal, Lisbon

€1,900,000 — €3,400,000

Apartments in a luxury residential complex

137 m² — 245 m²

3—4

3—4

Investors can choose the most profitable combination of private houses and city apartments. After obtaining a residence permit, it is allowed to rent out the property. Profitability from renting objects in Portugal averages from 4.5 to 7% per annum.

For the purchase of real estate. From 2022, residential real estate is allowed to be bought only in the interior regions of the country, as well as in autonomous regions in Madeira and the Azores.

It is no longer possible to obtain a residence permit in Portugal for the purchase of residential property in large and coastal cities popular among tourists like Lisbon, Cascais, Porto and others.

Restrictions do not apply to commercial real estate, it can be bought in any region of Portugal.

Movement within the Schengen zone with a Portuguese residence permit card is free. It is allowed to stay without a visa in any country of the region for up to 90 days in half a year. Free travel, recreation, meetings with business partners — all this becomes possible thanks to the purchase of a house or apartment in Portugal.

If the buyer would not like to immediately pay the entire amount under the contract of real estate, he can take out a mortgage. Conditions for obtaining and paying mortgage Portugal:

• The average mortgage rate is 3,31% per year.

• The initial payment is 30‑50% of the value of the object.

• Monthly payments are no more than 35% of the amount of income.

• Mortgage terms can be up to 40 years.

However, the point of investment programs is to attract money to the country’s economy. Therefore, having taken a mortgage, you will not be able to participate in the Portuguese residence permit program for investment.

Mortgages are suitable for those who want to buy real estate, but do not plan to participate in the Portuguese residence permit program for investment.

D7 visa for moving to Portugal, travel and citizenship after 5 years

Individuals from 21 to 75 years old can get a mortgage. The sum of the loan term and the age of the borrower cannot exceed 75 years.

To apply for a mortgage in Portugal, the following documents are required:

• a photocopy of the passport;

• an individual tax number;

• a bank statement on the state of the borrower’s account;

• an income statement for the year;

• an information on the amount of wages for three months.

Traditionally, real estate in the capital Lisbon and Porto is in demand. The rent here is high, and there are a lot of people who want to rent a house, because the cities are the business centers of Portugal. Real estate on the coast is also popular in the elite resorts of Cascais, Estoril, Carcavelos, where world stars often visit and buy real estate in Portugal.

It is profitable to invest in luxury houses. In Portugal, villas in the southern province of Algarve, Albufeira, Vilamoura, Quinta do Lago, Vale do Lobo are most valued. There are many exclusive VIP-class offers. If your goals are a combination of several inexpensive apartments and houses, pay attention to Sagres, Lagos, Portimao.

Consider offers on the island of Madeira. Prices here are lower due to lower real estate tax rates and the cost of concluding a sale and purchase transaction.

Portugal, Funchal

€200,000 — €330,000

Modern apartments on the island of Madeira with a guaranteed return

27 m² — 72 m²

1

1

Portugal, Funchal

€350,000 — €1,100,000

Apartments in a new residential project with a swimming pool

98 m² — 242 m²

3—4

3—4

Portugal, Funchal

€350,000 — €600,000

Apartments on the coast of Funchal

76 m² — 153 m²

1—2

1—2

Open an account in a Portuguese bank. It is necessary to buy real estate and pay for the residence permit program by investments. Any local bank will do.

Obtain an individual tax number. To have a Portuguese analogue of TIN is also mandatory as without it, it is impossible to conclude large transactions in the country, such as buying real estate. Obtaining an individual tax number costs €10.2.

Choose a property. We recommend entrusting the search and selection of objects to a real estate agency. In Portugal, their activities are tightly controlled by the state, so there is no reason not to trust them.

Prepare documents. Entrust the transaction to a professional lawyer. He will be able to complete the transaction even without your presence in Portugal — by proxy.

If you choose to be present during the transaction, you will need an interpreter as all documentation is in Portuguese.

Conclusion of a preliminary agreement. When the property is selected, you conclude a preliminary contract of sale with the seller in the presence of a notary.

The contract fixes the condition of the house or apartment. It also specifies the payment terms for the purchase.

The deposit paid at the stage of the preliminary contract, as a rule, is 10‑20% of the value of the object.

The deposit is non-refundable only if the transaction fails through your fault. Breaking the transaction on the part of the seller obliges him to return the amount of the deposit to you with interest.

Verification of documents and payment of taxes. After the conclusion of the preliminary contract, the lawyer prepares the necessary documents. The process takes two weeks.

The buyer of real estate pays stamp duty and transfer tax. Additional costs include:

• 0,8% of the value of the object, which is specified in the contract of sale as the stamp duty.

• From 0 to 8% as the tax on the transfer of ownership of real estate. Depends on the cost and type of object.

• 5% as the flat tax when buying land.

• From 3 to 5%as the payment for the services of a real estate agency.

• 1% as the cost of a lawyer’s services.

• 1% for the work of a notary.

At the same time, lawyers can prepare documents for applying for a residence permit for investment. The list includes:

1. Passports of applicants.

2. Temporary entry visas to Portugal.

3. Medical insurance policy.

4. Application for a criminal history check by the Foreigners and Borders Service of Portugal.

5. Certificate of no criminal record in the country of citizenship.

6. Certificate of no debt from the tax and customs services.

7. Contract for the sale of real estate.

8. A certificate confirming the transfer of money under a contract for the sale of real estate.

9. Birth certificates of children.

10. Marriage certificate.

If documents for a residence permit are submitted immediately after the conclusion of a preliminary contract for the sale of real estate, a certificate from the registration authorities for real estate rights is also needed.

Conclusion of the main contract. The signing of the document takes place at the notary. The rest of the value of the object is also paid here. This completes the checkout process.

The contract of sale is submitted to the Land Registry of Portugal, where the ownership of the object is re registered to the new owner.

After that, the buyer enters into full ownership of the housing and can dispose of it at his discretion.

Is buying property in Portugal a good investment: Buying property in Europe in only a limited number of countries gives the right to obtain a residence permit, and under a simplified procedure.

Obtaining a residence permit in Portugal by buying a house or apartment is a great option for those who want to become the owner of an “alternate airfield” in the EU, and, if necessary, move the whole family there.