Portugal Real Estate Overview
Explore the essentials of acquiring premium real estate in Portugal, a top destination for expatriates and foreign investors.
Key Highlights:
Holding Period: None required.
Minimum Investment: Not applicable.
Ownership Type: Shared ownership possible.
Rental Yield: Estimated at 3–5%.
Portugal Real Estate Market
Portugal’s affordability, lifestyle, and tax benefits make it a preferred choice for expatriates and investors.
The country’s Non-Habitual Resident (NHR) tax regime provides significant advantages, such as:
A fixed 20% tax on personal income for up to 10 years.
Exemption from double taxation on foreign income, including employment and pension income.
Recent legislative changes further attract retirees, allowing them to live in Portugal with tax-free pension income. Programs like the Portugal Golden Resident Permit have incentivized foreign real estate investments, enabling property purchases starting at EUR 500,000. This program offers a pathway to Portuguese citizenship after maintaining the investment for five years.
Acquisition of Property in Portugal
Property costs vary depending on location and property age, with new constructions typically costing more. In areas like city centers or historic villages, pre-owned properties may be the primary option due to limited availability. Notable benefits include:
Immediate Occupancy: Purchased properties can be occupied immediately after signing and registering the deed.
Rental Opportunities: Purchased properties can be quickly listed on the holiday rental market, generating income.
Foreign Buyers: Regulations and Procedures
Restrictions: No restrictions exist for foreign buyers, but a Portuguese tax number is required.
Acquisition Process: Properties can be purchased locally or remotely, with many agencies offering virtual tours and online transactions, streamlining the process for international buyers.
Bank Account Requirement: Buyers must open a Portuguese bank account and obtain a taxpayer number. Assistance is available to simplify these steps, either locally or remotely.
Additional Costs and Taxes
Property transactions incur various expenses, including:
Property Transfer Tax: Rates depend on property type.
Rustic property: 5%.
Commercial, services, or land: 6.5%.
Stamp Duty: Fixed at 0.8% of the property value.
Deed and Registration Fees: Registration costs EUR 250 per property.
Municipal Property Tax (IMI): An annual tax ranging from 0.3% to 0.4%, based on the property’s evaluated value. Rates differ by municipality and are updated every three years.
Rental Income and Investment Returns
Expected Yields:
Residential property: 3%–5%.
Commercial property: 5%–6%.
Industrial property: 7%–8%.
Rental Income Taxation: A flat rate of 28%, with deductible expenses including:
Insurance costs.
Property management fees.
Municipal taxes.
Maintenance expenses.
Portugal offers attractive opportunities for property investment, combining affordability, lifestyle perks, and robust tax incentives. Whether for personal use or rental income, the market provides diverse options for foreign buyers to invest with confidence.
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