In the past few years, Portugal has become a more popular place for foreigners to buy holiday homes, investment properties, and homes to live in permanently. Many foreign buyers are more interested than ever in buying property in Portugal. The country has a beautiful, sunny climate all year, a rich history, a laid-back Mediterranean lifestyle by the sea, and attractive residency benefits. There are, however, some important legal, financial, and practical things you should learn a lot about before you make a buy. Here is a more complete list of the most important things to think about when you are a stranger buying property in Portugal.
What are the rules, fees, and taxes for buying and selling real estate in Portugal?
If you are a foreign buyer in Portugal for the first time, you should really take the time to learn about the country’s real estate rules, laws, taxes, and fees. This way, you can avoid any problems with the government or costly surprises later on. Keep in mind that non-citizen buyers often have to pay more in rates and taxes than Portuguese sellers. In addition to basic purchase taxes, you should also look into capital gains taxes on sales, yearly wealth taxes on expensive homes, and inheritance tax obligations for foreign owners. Talking to an experienced local Portuguese real estate agent can help you make sure you follow all the rules during the whole process of buying property in Portugal. Also, know the steps and costs needed to get the right building permits and licences, as promised.
Look into different types of properties and popular investment areas.
Before you go too far in your property search, you should think about what kinds of homes and areas of Portugal would best suit your wants and interests. Apartments in Lisbon or Porto are cheap choices for city living that are close to other cities. Villas and estate homes in the countryside that are spread out offer a more relaxed way of life in the country at higher prices. There are vacation rentals and investments that are built on tourism in popular beach resort towns. When looking at buying property Portugal, you should learn about the different areas. For example, the Algarve region is great for people who want to spend time in the sun, while the Comporta region is perfect for people who want to live in complete peace and quiet.
When you buy something, have financing ready ahead of time.
Before you try to buy a home in Portugal as a foreign buyer, you need to make sure you have the money to do so. Non-citizens who want to get a mortgage usually have to put down a big down payment of 30 to 40 percent of the total purchase price. If you need a mortgage, the good news is that many Portuguese banks have worked with foreign buyers in real estate before. Check out Portugal’s non-habitual resident tax plan to see if you can get a big discount on your taxes. There may be ways for sellers to offer credit through the sale of their home. But in reality, most Portuguese sellers who sell to people from other countries expect to get most of their money in cash.
Do your research and do a thorough inspection.
No matter how charming a house may look, it’s important to be patient and do your research when it comes to inspections, permits, and paperwork so you don’t end up getting problems that the previous owners didn’t tell you about. You might want to hire a professional structural inspector to check the house’s overall health, including its utilities, systems, foundations, roof, etc. Look for energy rate certificates, occupancy permits, and certificates of habitability that are out there. If it’s part of a housing development, read the community bylaws, homeowner group rules, and fees very carefully. If you don’t check everything, you might end up getting bad problems that you should have found before you bought.
Find Portugal real estate agents who are knowledgeable.
Starting out by working with the right local real estate agents who know what they’re doing speeds up the buying process, protects your interests as a foreign owner, and keeps you from making mistakes that are easy to avoid. A reliable bilingual real estate lawyer who knows Portugal’s property rules will make sure that contracts protect you properly during transactions. Real estate companies in Portugal that have been around for a while can make it easier to find listings that meet your needs and specifications. They can also give you an idea of what the property is worth, help you negotiate the price, and help nervous first-time buyers. But watch out for scams from dishonest real estate agents who want to take advantage of foreign buyers who don’t know what’s going on.
Learn the whole process, timeline, and steps of buying something.
Take the time to learn about the process, timing, and order of steps you will need to take from making an offer to owning a home in Portugal before you go there or send any money. The buyer makes an offer to the seller after finding the property and seeing it in person. Once an offer is accepted, it takes about two to three months to do due diligence, get financing, fill out paperwork, get permits, and hire pros. First the promissory note is signed, and then the final deed of sale. The formal deal is complete when the property is registered officially, utilities are switched over, and other paperwork is taken care of.
Deal with problems with language and communication
When buying land in Portugal as a foreigner, getting past the language and communication barriers is very important to keep things clear. If you don’t speak Portuguese very well, you might want to bring a trusted interpreter with you to meetings and property trips. There are a lot of real estate agents in Portugal who speak English, but make sure that the one you talk to can connect clearly and explain complicated ideas easily. Remember that any formal papers you need to buy something will still be given to you in Portuguese first. Do not sign anything that you do not fully read and understand.
Think about your lifestyle and possible goals for living there.
Before you invest in real estate, you should carefully think about your living goals and how long you want to live there. Will you only spend a few weeks a year at this vacation home? Or do you want to get permanent residency in Portugal and move there permanently? The Golden Visa programme in Portugal is very attractive because it lets qualified foreign property investors live there temporarily or permanently. There are other ways to become a resident, such as the D7 “passive income” visa. Make sure your plans are in line with the minimums and standards for investing in real estate.
Before buying an income property, find out if the local rental market will work.
If foreign investors want to buy a property in Portugal to rent out, they should carefully study the local rental market in the areas they’re interested in before committing to a purchase that is only for investment purposes. Tourists will probably be able to rent short-term homes in large cities like Lisbon and Porto and make a lot of money. On the other hand, smaller towns and villages that aren’t close to big cities may have a hard time finding enough renters when tourism slows down. Have a clear rental investment plan that takes into account the facts of the area, as well as a way to find a reliable property manager to handle marketing and communicating with tenants while you’re away.
Try to become a part of the local community.
Expats say that foreigners who try to become part of the local Portuguese community often have a much better time as property owners. Let go of your assumptions and get to know people in your neighbourhood with care. Learn some simple Portuguese phrases and use them often. Instead of big stores, shop at smaller stores and markets in your area. Go to events in your neighbourhood to get to know your neighbours. Hiring people from the area also creates jobs and helps local businesses grow. Try not to be seen as a stranger who doesn’t know what’s going on.
Buying property in Portugal can be a dream come true for people from other countries who want to live by the sea or in a luxury second home if they do their research, plan ahead, and learn about the culture. Before making big financial decisions, make sure you hire qualified bilingual professionals, take the time to learn the rules, find real estate agents you can trust, and do a lot of study on places other than their beaches and food. Discover more about the people, language, and society. Be careful to make sure that buying a home in Portugal fits in with all of your life goals.
