Property Investment in Portugal as a Foreigner

Purchase taxes

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.

Ownership 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.

Of the cadastral value — the annual property tax 

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 

• €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.

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 €25 to 200 per month.

Sale taxes

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.