The real cost of buying property in Portugal

You always need to keep in mind that the cost of buying property in Portugal is never limited to the purchase price. It is only the beginning. You also need to consider the additional “hidden” costs of buying property.

When buying property, your biggest expense is the financial commitment of repaying your mortgage. However, there are other costs that you will need to consider when deciding what you can afford. Here is an overview of the costs involved when purchasing a property in Portugal.

The Cost of Equity

This is the difference between the purchase price and the amount of the mortgage you are taking out. If you are also selling, your equity will probably be included in the value of your existing property.

The Cost of Your Mortgage

Most people have to borrow to buy their home, and unless you are seriously wealthy you will need a mortgage. See mortgages for more information.

Legal Fees – Solicitor / Lawyer

The legal process of buying or selling property in Portugal like anywhere else is called “conveyancing”. The purchasing process can sometimes be relatively complicated and remember that you are in a foreign country with different rules. We strongly advise you find and appoint a solicitor before you find a property for sale in Portugal that you really like and do not want to miss. The solicitor will normally charge between 1% and 3% of the purchase price, plus IVA (Portuguese VAT equivalent) for the legal work. You can search through our business directory for a lawyer in Portugal. For more information on conveyancing and what is involved, check out our legal guide.

Taxes

Property Transfer Tax (IMT) (formerly SISA)

Prior to execution of the public deed, the purchaser is required to pay a property transfer tax (IMT) to the local Tax Office. Transfer of residential houses or apartments is taxed on a sliding scale by reference to a table of tax rates and deduction amounts.

AN EXAMPLE, IF THE DEED VALUE OF THE PROPERTY IS 200,000 EUROS, THE TAX APPLICABLE TO THE PURCHASE IS 200,000€ x 7% – 7900€ = 6100€

IMI (formerly Contribuição Autarquica)

Every year you will be asked to pay a tax called IMI, formerly “Contribuição Autárquica”, through your local council. This tax is charged at a rate of 0.4% to 0.8% for urban properties ( villas, apartments and plots ), which is then charged on the rateable value of the property as assessed by the local Tax Department.

Notary & Registration Fees

Notary & Registration fees – approximately 1% of the escritura value.

Registration

Registration of legal charge over the property. This will result in additional Land Conservatory fees.

Survey fee

You and your mortgage lender will require a valuation report. You may wish to have a more detailed report prepared, particularly if you are buying an older property. See survey for more information.

Building / Home Insurance

You and your lender will want a proper insurance to protect your home against any damage.

Removal / Moving Costs

The cost of moving abroad, transporting your belongings from where you currently live to your new home will depend on the distance and the quantity.

Life Assurance

Your lender will insist on life cover to ensure the mortgage would be repaid if you died.

The following additional costs should also be considered:

Furniture and equipment – Identify the essentials you need.
Contents insurance – Insures the contents of your home against loss or damage.
Mortgage payment protection plan – Your mortgage repayments will be covered for an agreed period if you lose your job, or are unable to work due to illness.

Disclaimer
The above information is provided as guidance only and does not form part of any contract. You must seek professional assistance before making any buying decision. Currency equivalents are indicative only and should be checked with your bank. All information is subject to alteration without prior notice.