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Real estate investment in Portugal

The liquidity of real estate investments is confirmed by statistics: every quarter, the price per square metre of housing increases by an average of 1.9%. Five years ago, a house of 100 m² cost €85,500, and today it is sold for €125,000.

€2,465 Average price per 1 m²
of housing in Portugal
€280,000 Minimum investment amount
to get a residence permit
11% The buyer’s expenses,
of the transaction amount

Cost of a 3-bedroom apartment in Portugal

€3.4 million

Penthouse in the centre of Lisbon,
on the banks of the Tagus river

€1.25 million

Apartment in the historic centre of Porto

€450,000

Apartment in Aveiro,
the Central Region

What do investors buy?

Apartments. The most expensive ones are in the major cities of Lisbon and Porto.

  • apartments
  • duplex

Villas. The most expensive ones are in Cascais, a prestigious suburb of Lisbon.

  • villas with pools and gardens

 

Interesting objects in Portugal

Help with the choice

I’ll tell you which object is of the best quality of construction and in an attractive area for living or renting.

Zlata Erlach, expert of the residence permit program in Portugal for investment

Portugal residence permit or citizenship by real estate investment

In Portugal, a state program grants investors residence permits — the Golden Residence Permit Program.

Buying a property is one of the ways to get a residence permit. After five years of maintaining the residence permit status, the investor can get citizenship. It is not necessary to live in Portugal: to extend the residence permit, it is enough to stay in the country for seven days a year.

Portugal residence permit
by real estate investment

Minimum property value for a Portugal residence permit

€500,000
Real estate not older than 30 years: residential or commercial
€350,000
Real estate over 30 years old for reconstruction

You can invest 20% less in real estate if you buy a property in a sparsely populated region, for example, in the town of Aroca, 40 km away from Porto, or in the Azores and Madeira.

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Taxes and associated costs

Purchase
Ownership
Sale

Property buyers pay a one-time transfer tax, stamp duty and special fees.

The transfer tax amount depends on:

  • the transaction amount;
  • the property location — on the continent or the islands;
  • the purpose of housing — primary or additional, for example, for rent.

The total associated costs will be 9% to 11% of the purchase agreement value. When buying an apartment worth €500,000, the investor will spend €556,750, including additional costs.

9—11 % Of the contract value are related costs when buying a home
Expenses when buying a new home to live in mainland Portugal
Transfer tax
0—8%

Property value of up to €574,323

6%

Property value of €574,323
to €1,000,000

7.5%

Property value of €1,000,000 or more

Stamp duty
0.4—0.8%
Legal and notarial support of the transaction
2.5%
Registration of ownership
€250 
Change of utility bill

In case of purchasing a secondary real estate

€100—200 

Taxes

The annual property tax in Portugal is 0.3-0.8% of the cadastral property value. The tax rate depends on the property type (an apartment or a house), location and age. The tax amount is set annually by the municipality.

Urban real estate owners pay an additional AIMI tax — a municipal property tax. AIMI is from 0.7%.

If the cadastral value of the residential real estate is more than €600,000,
the owner pays an additional wealth tax:

  • 0.7% of the amount exceeding €600,000 for the part of the value
    from €600,000 to €1,000,000;
  • 1% of the amount exceeding €1,000,000 for the part of the value over €1,000,000

If the owner rents out the property, they pay a tax of 25% on rental income.

€2,800 Average annual expenses on maintenance of a three-bedroom apartment

Communal payments

Utilities. Water and electricity are paid according to meters. The tariff depends on the consumption volume: the less you consume, the lower the tariff. There is no central heating in Portugal. Houses with gas heating are rare. Water in houses is heated in electric or gas boilers.

Air conditioners and electric heaters for heating are rarely used due to high electricity bills: additional costs are from €100 per month with an average electricity cost of €50 per month. Private houses are often heated with wood-burning fireplaces.

They cook on gas in Portugal. There are central gas networks only in large cities. Where there is no gas supply network, gas is either bought
in balloons, usually for villas, or pumped into special tanks for condominium apartment buildings.

A balloon of gas costs €50 and lasts a month for a family of four. In other cases, gas is paid according to the meter.

Owners of real estate in multi-apartment condominium buildings pay extra for maintenance: for the elevator, cleaning, repairs, security, and swimming pools. The price range is from €25 to €200 per month.

Internet, TV and telephone connection cost from €35 to €45, depending on the tariff and locality.

Electricity, water, garbage collection
€65—175 

per month

Maintenance of the building

Elevator, cleaning, repairs, and security

€25—200 

per month

Property sellers pay capital gains, real estate sales, and agency fees. If the seller reinvests the money from the real estate sale, they pay half the capital gains tax.

Portuguese tax residents are exempt from paying capital gains tax when selling their primary home to buy a new apartment or house. To qualify as a tax resident, you must live in Portugal for at least 183 days a year.

4—7% Additional expenses
on the sale of real estate
if the sale price does not exceed
the purchase price
Selling expenses
Capital gains tax

Paid on the difference between the purchase and sale prices

28%
Sales tax

Payable on the cadastral value of the property

0.4%
Agency fee

Depends on the real estate agency and includes VAT

3.7—6.2%

Frequently asked questions

How much is property tax in Portugal?

Buyers of property in Portugal pay a one-time transfer tax of 0—7,5%. The rate depends on the transaction amount, the property location, and its purpose.

Property owners in Portugal pay the annual property tax of 0,3—0,8% of the cadastral property value. If that value exceeds €600,000, they pay an additional 0,7% or 1% tax. Urban real estate owners pay an additional AIMI tax starting from 0,7%. Landlords pay a 25% tax on rental income.

Sellers of property pay the 28% capital gains tax and the 0,4 sales tax.

Can a foreigner buy property in Portugal?

Yes. But without a certain type of visa, foreigners can stay on their property only for a limited period of time. If they buy property for at least €350,000, they can participate in the Golden Residence Permit Program in Portugal.

The residence permit allows investors to live, work, study and travel in Portugal, as well as freely enter other countries of the Schengen area.

What is the average house price in Portugal?

The average cost of housing in Portugal is €2,465 per 1 m². The most affordable properties are located in the Portalegre of the Alentejo region. The average cost of housing there is €635 per 1 m².

Relatively low prices for 1 m² of real estate can be also found in Braganza — €815, Beja — €850, Viseu — €920, Evore — €1,050, the Azores — €1,230, and Alentejo — €1,245.

Real estate in Portugal is a liquid asset. Prices for objects are steadily growing by 5—10% per year.

Are real estate prices dropping in Portugal?

No, on the contrary. In the last 5 years, real estate prices in Portugal grew 1,5 times. Property prices in Portugal are rising faster than the European Union average.