Buying property in Portugal: All you need to know

Portugal attracts newcomers with its sunshine, safety, cultural richness, and an affordable cost of living. It’s no surprise that foreigners are looking to put down roots here by buying property, whether as a retirement retreat, a family home, or an investment for the future.

This article explains the entire process of buying property in Portugal. You’ll find step-by-step guidance on legal requirements, financing, taxes, and common pitfalls, giving you the clarity and confidence needed to move forward.

Key takeaways: Buying property in Portugal

• Foreigners can buy freely – Non-residents have the same property ownership rights as locals, though an NIF (tax number) and bank account are required.

• Costs go beyond the purchase price – Buyers should budget an extra 7–10% for taxes, fees, and notary charges.

• Property types are diverse – From city apartments to rural quintas and coastal villas, Portugal offers a wide range of options for different lifestyles and budgets.

• Taxes are layered – One-off costs like IMT (transfer tax) and stamp duty apply at purchase, while IMI (annual property tax) and, in some cases, AIMI (wealth tax) continue annually.

• Legal due diligence is essential – A lawyer should confirm ownership, check for debts, and review contracts to avoid hidden pitfalls.

• Property ownership doesn’t equal residency – Buying a home strengthens visa applications (D7, D8), but doesn’t automatically grant residency.

• Professional guidance reduces risk – Working with bilingual lawyers, relocation experts, and surveyors helps ensure a smooth, secure process.

Why are people buying property in Portugal?

Portugal continues to attract buyers for both lifestyle and investment reasons. 

Here are some of the main factors driving demand:

• Sunny climate and natural beauty: With more than 300 days of sunshine each year, golden beaches, and scenic countryside, Portugal is one of Europe’s most appealing destinations.

• Affordable cost of living: Portugal has a lower cost of living than in the US and many Western European countries, offering better value for money. 

• Safe and welcoming environment: Ranked among the safest countries in the world, Portugal is known for its hospitality and strong expat communities.

• Steady property market growth: Real estate values have consistently increased, making property a reliable long-term investment.

• Healthcare and infrastructure: High-quality healthcare, good schools, and modern infrastructure make it a strong choice for retirees and families.

• Tax advantages: Programs like the updated NHR 2.0 regime provide attractive tax benefits for qualifying residents.

• Access to Europe: For non-EU citizens, living in Portugal offers a gateway to visa-free travel within the Schengen Area.

Can foreigners buy property in Portugal?

Yes, foreigners can buy property in Portugal and have the same ownership rights as locals. You’ll need a Portuguese tax number (NIF) and a local bank account to complete the purchase.

While having a bank account is not mandatory if you are not using financing, it is highly recommended to make the process smoother. With the right legal support, the purchase process is straightforward.

While owning a home doesn’t automatically grant residency, it can strengthen visa applications such as the D7 or D8.

Tip: When buying property in Portugal as an American, consider working with a bilingual lawyer familiar with local regulations to ensure a smooth transaction and avoid potential pitfalls.

Purchasing property in Portugal: Market overview

The cost of property in Portugal has risen steadily, with the national average reaching €1,951 per m² in early 2025, nearly 19% higher than the year before. Demand from both local and international buyers remains strong, pushing prices to record levels across all regions. 

The Portuguese housing market is marked by strong demand, rising prices, and healthy rental potential. Lisbon, Porto and the Algarve continue to lead with higher price points, while areas like Braga and Central Portugal are gaining momentum, offering more affordable opportunities. 

Buyers are actively choosing between vibrant urban centers, coastal hubs, and quieter inland regions, which shows how the cost of property in Portugal appeals to investors, families, and retirees alike.

Types of property in Portugal

Portugal’s real estate market offers a wide range of options to suit different lifestyles and budgets.

• Apartments: Popular in cities like Lisbon and Porto, ranging from compact studios to large family flats, often in modern or historic buildings.

• Detached houses (casa or moradia): Standalone homes, usually with outdoor space such as a garden, patio, or parking area.

• Semi-detached houses (casas geminadas): Homes that share one wall with a neighbor, common in suburban areas.

• Townhouses: Found in both urban and rural settings, often combining traditional design with modern amenities.

• Villas: Common in the Algarve and coastal areas, often featuring private pools, gardens, and sea views.

• Quintas: Rustic farmhouses or country estates, ideal for buyers looking for space and tranquility in rural Portugal.

• Land (terreno): Plots for building a new home, though buyers must confirm with the local Câmara Municipal that the land is zoned for residential use.

Requirements for purchasing property in Portugal

When purchasing property in Portugal, buyers must prepare the following:

• Valid identification: Passport or national ID card.

• Portuguese tax number (NIF): Mandatory for any property transaction.

• Portuguese bank account: Recommended for handling payments and taxes.

• Proof of funds or income: Required if applying for a mortgage.

• Legal assistance: A lawyer to review contracts and safeguard your interests.

• Property documentation: Includes land register (Caderneta Predial), energy certificate, and promissory contract (CPCV).

• Taxes and fees: Payment of stamp duty (Imposto de Selo) and other applicable charges.

Step-by-step guide to buying a house in Portugal

Buying property in Portugal is a structured but detailed process. Following the steps in order will not only make your purchase smoother but also protect you from unexpected pitfalls. 

Below is a practical guide, complete with tips and considerations at each stage.

1. Define your goals and budget

The first step is deciding why you are buying: a holiday retreat, a permanent family home, or a rental investment. This will influence the type of property and location you should focus on. Be realistic about your budget and factor in potential currency fluctuations if your funds are not in euros.

In addition to the purchase price, set aside 7–10% extra to cover taxes and fees, including property transfer tax (IMT), stamp duty, notary and registration charges, and, in some cases, agency fees. 

2. Research financing options

If you plan to use a mortgage, be aware that financing conditions vary depending on whether you are a resident or a non-resident. Portuguese residents can access mortgage terms of up to 50 years, while non-residents generally qualify for up to 30 years.

Most banks will lend between 60–80% of a property’s value, meaning you need to provide at least a 20% deposit. The standard rule is up to 90% financing for residents, and 70–80% for non-residents. You’ll also need to choose between variable-rate mortgages, which are tied to Euribor and carry lower early repayment penalties (maximum ~0.50%), and fixed-rate mortgages, which offer stability but higher redemption penalties (maximum ~2%).

3. Obtain a Portuguese NIF and open a bank account

An NIF is mandatory for buying property, paying taxes, and handling most financial transactions in Portugal. You can obtain one at a local tax office or appoint a legal representative to do it for you.

While not legally required, a Portuguese bank account is highly practical for paying deposits, transferring funds, and setting up utilities. Touchdown’s relocation services include remote NIF registration and bank account setup, making this step seamless for foreigners who may not yet be in Portugal.

4. Find the right property

Once your paperwork is in order, you can start your search. Use reputable property portals, experienced real-estate agents, or relocation platforms that understand the needs of expats. Scheduling physical or virtual viewings is crucial to get a realistic feel for the property.

It’s also wise to hire a surveyor to check for structural issues and confirm that the property has the proper usage permit.

5. Make an offer and sign the promissory contract (CPCV)

After selecting your property, research comparable prices in the area to make a fair offer. Once accepted, you will sign the CPCV, which formalises the purchase conditions, price, and payment schedule. At this stage, a deposit of around 10% is usually required.

This contract legally binds both parties, and failing to follow through can lead to losing your deposit. Having a lawyer review the CPCV before signing is essential to avoid hidden clauses or obligations.

6. Conduct due diligence and final deed

Due diligence is one of the most important steps. Your lawyer or notary should verify property ownership, confirm there are no debts or mortgages attached, and review the land registry and planning permissions.

Once these checks are complete, you’ll sign the Escritura Pública de Compra e Venda (final deed) in the presence of a notary. At this point, you pay the remaining balance, and the property is officially transferred to your name.

7. Register and pay taxes

After signing, the transaction must be registered with the Portuguese Land Registry and the Tax Authority. Taxes payable include IMT (property transfer tax), stamp duty, and notary/registration fees. These payments are non-negotiable, and failing to complete them could lead to delays in officially recognising your ownership. 

8. Post-purchase tasks

Once the property is officially yours, there are still practical steps to complete. You’ll need to transfer utilities into your name, arrange home insurance, and consider ongoing maintenance. If the property is a holiday home, hiring a property manager can make sure it’s cared for when you’re away.

If you intend to rent your home short-term, be aware of local regulations and licensing requirements. Touchdown also supports expats after their purchase with services like rental contract reviews, tax consultations, and ongoing legal support to help you settle in confidently.

Taxes when buying property in Portugal

Portugal has several property-related taxes that buyers need to plan for. These include both one-off payments at the time of purchase and ongoing obligations once you own the property.

IMT (Property Transfer Tax)

Paid when purchasing property, with rates ranging from 0% to 8% depending on the type and value. Rural properties are taxed at 5%, while commercial purchases are 6.5%. Residential homes follow a progressive scale, so the effective percentage is lower, with exemptions for lower-value properties and higher rates for luxury homes. IMT must be settled before the final deed is signed.

Stamp Duty (Imposto de Selo)

A flat 0.8% applied to the transaction value, payable alongside IMT. Stamp duty also applies to rental contracts and gifts or inheritances, though rates vary depending on the situation.

IMI (Annual Municipal Property Tax)

Charged yearly, usually 0.3–0.5% for urban properties and 0.8% for rural ones. The tax is calculated on the VPT (Valor Patrimonial Tributário),  the government-assessed value, not the purchase price, and the VPT is typically much lower than market values. Certain exemptions apply, such as for primary residences below a set value or for properties undergoing municipal renovations.

AIMI (Wealth Tax)

An additional property tax for high-value real estate. It applies to properties worth more than €600,000 (or €1.2 million for couples), with rates between 0.7% and 1.5% depending on the property’s value.

Capital Gains Tax

If you sell the property, profits are are taxed on 50% of the gain. Exemptions may apply if the proceeds are reinvested in another primary residence.

Rental Income Tax

If you rent out your property, rental income is taxable. Non-residents usually pay a flat 25% or less according to the duration of the contract, while residents can choose if they want to pay the flat fee or to be subject to Portugal’s progressive income tax rates.

Since the rules and exemptions can be complex, it’s wise to seek professional advice. 

With Touchdown, you can connect directly with expert Portuguese lawyers who provide tailored tax consultations, helping you understand your obligations and structure your investment in the most efficient way.

Buying property in Portugal: Pitfalls and solutions

While buying property in Portugal is often a straightforward process, there are potential pitfalls to be aware of. With the right preparation and expert support, most of these risks can be avoided, ensuring your investment is safe and stress-free.

Hidden property issues

Some properties may carry structural damage, unlicensed extensions, or debts attached to them that aren’t obvious during initial viewing. 

To avoid surprises, hire a certified surveyor, request an official energy certificate, and have your lawyer review the land registry for outstanding obligations. 

Legal complexities

Portuguese property law involves multiple agencies, documents, and registrations that can overwhelm foreign buyers. Missing even a small detail, like confirming the seller’s legal right to transfer the property, can cause major setbacks. 

Always work with a qualified lawyer to verify ownership, check building licenses, and review contracts line by line. 

Wrong location choice

Location is everything. A property that looks perfect on paper may not suit your lifestyle if it’s far from transport, schools, healthcare, or job opportunities. For investors, picking an area with weak rental demand can also reduce returns. 

Spend time in the neighborhood during different times of day, ask locals about amenities, and explore long-term development plans in the area for informed decisions.

Hidden costs

he purchase price is only part of the story. Many buyers underestimate taxes such as IMT, stamp duty, or annual IMI. They also forget about notary fees, insurance, maintenance, and condominium service charges.

To stay on track, create a cost checklist early and update it as you progress. 

Market fluctuations

Although Portugal’s property market has been remarkably stable, wider economic shifts, such as interest rate changes or global demand from expats, can influence prices. If you’re buying for investment, think long term rather than relying on short-term appreciation. 

Diversify your strategy by considering rental yields as well as resale value. Working with a local market expert helps you understand these dynamics and choose properties that are resilient over time.

Cultural and language barriers

Most contracts and legal processes in Portugal are written in Portuguese, which can create misunderstandings for foreign buyers. Small misinterpretations can have big consequences, particularly in contracts or negotiations. 

To avoid this, work with bilingual professionals who can translate and explain documents clearly. 

Visa and residency options linked to property ownership

Owning property in Portugal does not automatically grant residency rights. To live in the country for more than 90 days, foreigners must apply for a visa first and for a residence permit later. Still, having a home can strengthen your application by demonstrating accommodation and long-term ties to Portugal.

Key visa pathways:

• D7 Visa (Passive Income/Retiree): For retirees or financially independent individuals with a stable passive income from pensions, dividends, or rentals.

• D8 Visa (Digital Nomad): For remote workers and freelancers earning income from abroad. It allows you to live in Portugal while continuing your professional activity elsewhere.

Property ownership is not a requirement for these visas, but it can support the process by proving you have suitable housing and stronger ties to Portugal.

The Golden Visa real estate route was discontinued in October 2023. However, the program continues through other eligible investments such as venture funds, job creation, and cultural contributions.

If you are unsure which visa option fits your situation, Touchdown provides a free Eligibility Checker to help you identify the right path. With the support of expert Portuguese lawyers, you’ll receive tailored advice on how property ownership can fit into your wider residency strategy.

How Touchdown helps you relocate to Portugal with ease

Touchdown is Portugal’s premier relocation platform. With a dedicated team of legal experts, we simplify the complexity of moving abroad by bringing together all the services you need to settle and thrive in your new home, all within one platform.

Every relocation journey is unique. That’s why, whether you’re moving alone or with your family, Touchdown creates a plan tailored to your goals and circumstances. Our free Eligibility Checker quickly highlights your options, while our in-house lawyers and step-by-step platform provide full clarity and guidance at every stage.

For instance, our legal team supports you with essential steps such as securing your NIF and bank account, and ensuring you meet all local requirements. From managing visa applications to optimizing your tax setup and assisting after arrival, Touchdown transforms complex immigration processes into a smooth and stress-free experience.

You can also book a 1:1 consultation with our experts to receive personalized advice and a relocation plan designed around your needs.

FAQs about buying property in Portugal

What are the pitfalls of buying property in Portugal?

Common pitfalls include hidden property issues like structural damage or debts, unexpected costs such as taxes and maintenance, and legal complexities if paperwork isn’t properly reviewed. These can be avoided with thorough due diligence and support from qualified lawyers.

How long can I stay in Portugal if I own a property?

Owning property alone does not grant residency rights. Non-EU citizens can usually stay up to 90 days in a 180-day period without a visa. For longer stays, you must apply for a residence permit, such as the D7, D8, or D3 visa.

Is it wise to buy property in Portugal?

Yes, Portugal’s property market has shown steady growth and strong rental demand, making it attractive for both lifestyle and investment. The decision depends on your goals, but for many buyers it offers long-term value alongside the benefits of living in a safe and well-connected European country.

Does owning property in Portugal make you a tax resident?

No, property ownership alone does not make you a tax resident. You become a tax resident if you spend more than 183 days per year in Portugal or if your primary residence is considered to be in the country. Buyers should seek professional tax advice to understand their obligations.