Buying Property in Portugal as a Foreigner in 2024

Buying property in Portugal appeals to many foreigners, and it’s easy to see why. Known for its attractive rental income potential, tax advantages, and desirable lifestyle, Portugal is the perfect gateway to Europe and ranks as the 7th best quality of life country for Expats. Wanting to live in Portugal is easy; but what do foreigners need to do to find the perfect property in the country?

In our guide to buying property in Portugal as a foreigner, we will take a close look at everything you need to do to move to one of Europe’s sunniest destinations, tackling everything from the most common pitfalls to avoid to how to navigate the house-buying process.

Buying a House in Portugal (Key Takeaways):

1. For buying property in Portugal you need to: (1) Obtain a Portuguese tax number, (2) Find the perfect Portuguese home, (3) Sign the CPCV and pay for the Sinal, and (4) Sign the final deed, known as Escritura.
2. CAFIMO can help you find financing for buying property in Portugal faster than anyone else: it can be done in less than 30 days after the initial submission to the bank!
3. Buying property in Portugal implies paying for tax, acquisition, and maintenance costs in addition to the property’s cost.
4. The Portuguese real estate market is booming right now, with a GDP growth of 2.3% in recent years.
5. Lisbon, Porto, and the Algarve are among the best cities/regions for buying property in Portugal as a foreigner.

How Does The House-Buying Process Work in Portugal?

CAFIMO can help you navigate the house-buying process in Portugal.

 

If you live outside Portugal and want to move into the country, you just need to follow four simple steps:

1. Prepare Yourself: Get a Portuguese Tax Number

The Portuguese Tax Number is known as NIF, and it’s equivalent to the TIN in the United States and the UTR in the United Kingdom. Every first-time buyer in Portugal needs to have a valid NIF to do things as elementary as opening a bank account, signing a rental contract, or even paying a simple utility bill.

The NIF is used to identify you as a fiscal agent before the Portuguese Government, and buying property in Portugal is virtually impossible without one. The good news? Anyone can get a Portuguese Tax Number, even foreigners who haven’t yet left their country of origin. All you need to do is find a Portuguese fiscal representative and submit the following documents:

• An up-to-date passport or civil identity document
• A residence permit
• Proof of birth (exclusively for minors)

Please keep in mind that having a residence permit for applying for an NIF doesn’t require having a property in Portugal. You can also file for a temporary residence permit, valid for one year and renewable for up to two years.

2. Find Your Dream Home: Where to Look For

You can look for your dream home in Portugal before obtaining a Portuguese NIF or applying for a mortgage, but it’s always better to scan the market with some actual buying power in hand. Buying a house in Portugal as a foreigner can seem overwhelming at first, but it’s not that hard when you know where to look.

Broadly speaking, there are three options at your disposal:

 

1. Online platforms: These property-selling directories are updated daily and feature houses from all around the country. The most common websites for buying property in Portugal are Imovirtual, Idealista, and OLX.
2. Real estate agencies: Agencies charge commissions of 3% to 6%, but these are indexed to the sale price (meaning it’s not you, but the seller, who has to pay for them). They can help you find off-market properties and visit them on your behalf, which is a huge plus if you live abroad.
3. Property hunters: These professionals aren’t limited by their agency’s network and can even cut commission-sharing deals with agents who have the property you’re interested in. Not that common in Portugal, property hunters are often used for tailored real estate services.

 

To further reflect on which option suits you best, consider their pros and cons:

 

Online platforms	Accessible anywhere Highly transparent Low to 0 fees	No support from experts You have to do all the paperwork Competitiveness
Real estate agencies	Support from experts Agents will deal with the entire process Off-market properties	Commissions can increase costs Agents can be manipulative Pressure to buy
Property hunters	Tailored property search Hunters will find a home for you Expert knowledge	Potential fees

Ways of finding a house in Portugal (with pros and cons)

 

Before making an offer (the next step in the agenda), remember that spotting the perfect Portuguese property is never enough: you also need to fund it. Fortunately, you can always count on the support of the best mortgage brokers, specifically dedicated to helping foreigners navigate the house-buying process in Portugal.

3. Make an Offer: Signing the CPCV

You’ve finally found the property of your dreams. The next move is to make an offer, wait for the verification process to be complete, and sign the Contrato de Promessa de Compra e Venda (CPCV), an official document that commits both buyer and seller to conclude the sale under predefined conditions.

 

The contract is legally binding once you pay for the Sinal, a deposit that enables you to reserve the property. Generally speaking, this is 10% of the purchase price, but it can be higher depending on the agreement with the seller. It is payable when you sign the CPCV, and you can get it back once you’ve signed the final deal (or it will be deducted from the purchasing price).

Signing the CPCV is a sensitive step of the house-buying process in Portugal because the Sinal guarantees the buyer’s commitment and can be lost if the buyer withdraws without a valid reason. For this and other reasons, it’s advisable to rely on the services of a real estate lawyer.

 

A real estate lawyer’s job includes helping you check that everything is in order, protecting you from unscrupulous sellers, and checking the legality of the property, the conformity of the documentation, and the absence of debts (for example). You can navigate the house-buying process in Portugal without one, but keep in mind you’ll be at your own risk!

If you need to obtain a mortgage in Portugal to finance your dream home, don’t forget to add the correspondent suspensive clauses in the CPCV.

4. Sign The Final Deed: The Escritura

The final stage in this long process is the signing of the final deed, known as Escritura (meaning what’s written) in Portugal. If you’ve been properly accompanied, everything should be in order for the signing. So, what’s left to do is:

1. Preparing for the Escritura: All property documentation must be provided to the notary beforehand. This applies to both the bank and the seller.
2. Signing the Escritura: The signing takes place in the presence of a notary. This is when the buyer and seller sign the deed of sale. It formalizes the transfer of ownership and the handover of the keys. At this point, you’re responsible for paying your part in the purchase price, plus any associated taxes and fees.
3. Finalizing the deed: Once the deed has been signed, the notary registers the sale in the land register, guaranteeing your rights as owner. At this point, it’s recommended to insure your new home (which is mandatory if you’ve taken out bank financing).

 

To finalize the deed, you also need to make sure you have the following documents ready on the day of the Escritura:

Buyer documents	Seller documents
NIF Valid identity card Portuguese bank account CPCV Mortgage documentation	APB/Distrate protocol Certidão Permanente Caderneta predial Ficha Técnica de Habitação Licença de utilização Energy certificate

Documents required to sign the Escritura for buying property in Portugal.

 

Note: If you don’t speak Portuguese, you should hire the services of a translator for the day of the Escritura. If you’re selling, keep in mind that the APB/Distrate protocol is essential if a bank has a mortgage on the property in question. It allows the mortgage to be lifted and usually takes around 10 days to be issued by the seller’s bank.

 

At CAFIMO, we have successfully worked with more than 1,000 mortgage processes in Portugal, so we have a pretty good idea of how long it takes to sign the Escritura at the notary’s office. According to our data, you need to wait an average of 70 days from the moment your process is first sent to the bank.

Financing a Property in Portugal as a Foreigner

CAFIMO has helped more than 1,000 foreigners finance properties in Portugal.

 

Financing via mortgage is a crucial aspect of buying property in Portugal as a foreigner, and the sooner you do it, the better! At CAFIMO, we always recommend our clients to wait for the bank pre-approval before signing a CPCV.

However, if you have just signed your CPCV and are looking for financing urgently, don’t panic: CAFIMO is here to lend a helping hand! At CAFIMO, our expertise is well-established thanks to almost 5 years of experience in the field and results that speak for themselves:

• More than 1,000 customers financed in Portugal
• More than 500 satisfied foreign customers
• Average financing rate of 80% of the purchase price
• The fastest financing: Less than 30 days after the initial submission to the bank

 

CAFIMO makes it easier than ever to finance and buy a property, even if you’re a first-time buyer in Portugal. We are handling all the process from A to Z. But if you need even more reasons to consider a Portuguese move, take into account that there are several advantages to how home financing works in Portugal.

Portuguese Financing Characteristics

• Up to 90% financing for a primary residence
• Up to 80% financing for a second home or rental investment
• Up to 70% financing for foreign residents outside the European Union
• Maximum term of 40 years for a principal residence, 30 years for a second home
• Maximum age for borrowing: 75 years (some banks may waive the age limit for borrowing up to 80 years)
• Credit insurance with the bank, or outside the bank with CAFIMO (known as life insurance in Portugal)
• Up to a maximum debt ratio of 50%

 

Should I Choose a Portuguese or Foreign Bank?

At first glance, it’s tempting to opt for a non-Portuguese bank because you won’t have to worry about the language barrier. Unfortunately, foreign banks are often unable to offer you any financing other than a mortgage on a property you already own. 

In fact, foreign banks are unable to take out a guarantee on a property in Portugal and will therefore need you to mortgage a credit-free property in your home country, corresponding (at least) to the budget you wish to invest. It’s a tiresome process, especially when you consider that rates for this type of loan are much higher…

 

With a Portuguese bank, things are much simpler. They have the capacity to take guarantees on their territory and can therefore offer you mortgages at very attractive rates. Don’t believe it? Just take a look at our current fixed and variable interest rates!

If you’re feeling lost, CAFIMO can guide you in finding the best bank for your project, streamlining the often complex process of buying property in Portugal as a foreigner.

Buying a House in Portugal (Costs)

Example of how much it costs to buy a house in Portugal.

 

At CAFIMO, we pay attention to detail, so we will provide you with a real-life example to get you thinking. Let’s take, as a simplified hypothesis, the acquisition of a property with the following characteristics:

• Purchase price €200,000
• 90% bank financing, i.e. €180,000 financed by the bank (a 100% mortgage in Portugal is possible, but very specific and rare)
• Principal home

 

Based on the above explanations, here’s the total amount you’ll need:

• • Deposit: €200,000 – €180,000 = €20,000
  • Bank charges + notary’s fees = €2,000

 

• Taxes

• • IMT = €3,977.58
  • IS = 0.8% x €200,000 = €1,600
  • ISUC = 0.6% x €180,000 = €1,080

 

This adds up to a total of roughly €8,567. 

Tax and Acquisition Costs

To understand even better what the costs of buying a house in Portugal are, let’s take a close look at each one of the liable tax and acquisition costs:

• IMT = Imposto Municipal Sobre as Transmissões Onerosas de Imóveis: Quite simply, this is the municipal tax on real estate transactions. It varies according to location, type of property, type of residence, and transaction value. It is calculated according to a progressive scale and can be simulated here.
• IS = Imposto do Selo: This is a tax applied by the Portuguese state to a variety of deeds. It is also known as stamp duty. For an acquisition, IS is equivalent to 0.8% of the purchase price.
• ISUC = Imposto do Selo sobre Utilização de Crédito: In the case of financing, a second stamp duty is applicable. This is equivalent to 0.6% of the financing amount.
• IMI = Imposto Municipal sobre Imóveis. It’s base­d on the Taxable Asse­t Value of the property and affected by location, condition, quality, size, and construction year. Each municipality se­ts its own IMI rate, usually betwee­n 0.3% and 0.5% for residential propertie­s. However, these­ rates can change yearly. You pay it once a year once you own the property.
• Capital Gains Tax: Residents are only taxed on 50% of capital gains. This taxable amount is then subject to the progressive personal income tax scale, which ranges from 14.5% to 48%. For non-residents, the tax rate is 28% on the total capital gain. There are some exceptions as if this property was your main residence and you are reinvesting the gains into a new principal residence within 2 years, you may be exempt.

 

Finally, consider two additional property purchase costs: paying the real estate lawyer and the bank/notary fees:

1. Lawyer: This is where you need to be careful. Some lawyers will charge a fixed fee, while others will charge you a % of the purchase price. Make sure you and your lawyer agree before you start, but expect to pay around €2,000.
2. Bank and notary fees: The processing of your application by the bank and the signature at the notary’s office should also cost around €2,000 in fees.

 

Maintenance Costs

Renting an overse­as property requires thoughtful planning and manage­ment, as maintenance costs—encompassing repairs, cleaning, fe­es, and taxes—can quickly accumulate­. At CAFIMO, we suggest that you:

• Do prudent budge­ting by researching local prices thoroughly
• Secure reliable property manage­ment services for a hassle­-free expe­rience
• See­k recommendations, revie­w online testimonials, and intervie­w multiple providers before­ making a decision
• Ensure all of the involved (you included) communicate promptly and effectively

 

Alternatively, you may conside­r self-managing the property, e­specially if you plan frequent visits. You could potentially save a lot by avoiding management fee­s (typically 10-20% of the rent price), but there will be increased re­sponsibilities and possible travel re­quirements.

 

Not happy with all of these additional costs? Lucky for you, there are no fees associated with CAFIMO! Our brokers’ services are 100% free of charge—whatever the amount of your purchase.

Insurance For Buying a House in Portugal as a Foreigner

 

In Portugal, homeowners must at least be insured against the risk of fire.

 

When it comes to insurance, there are usually two main requirements for buying property in Portugal:

1. Property insurance (also called Seguro Multiriscos): This coverage safeguards against risks like­ fires, theft, and natural calamities. It’s a prude­nt choice and frequently mandate­d when securing a mortgage. Ave­rage costs fluctuate based on prope­rty size and coverage scope­, but can you really put a price on peace of mind?
2. Mortgage insurance (also called Se­guro de Vida): When obtaining a mortgage, le­nders typically require what the­y term “life insurance” to cove­r the outstanding loan amount in the eve­nt of death or permanent disability. You’ll e­ncounter two primary options: (1) IAD (Invalidity, Accident, Death) and (2) ITP (Total and Pe­rmanent Disability). Premiums hinge on the­ loan amount, your age, and health status.

 

If you need help, we at CAFIMO can tell you everything about the best life insurance for your Portuguese mortgage.

Why Buy a House in Portugal? (9 Key Reasons)

More than 21% of Lisbon’s population is made up of foreign citizens.

 

Now that you know what it takes to buy property in Portugal (and finance/insure it accordingly), all that’s left to do is understand what makes the country so appealing to non-nationals. Is this really the Expat paradise so many people make it out to be? Is Portugal a good country to buy real estate right now? And how hard is it to maintain a property following acquisition?

 

Let’s start with the 9 best reasons why buying property in Portugal sounds like a nice plan:

1. Potential for profitability: With effortless gross returns between 5 and 10%, Portugal’s rental yield potential is quite real. Whether you plan on offering long-term rentals, seasonal rentals, or even commercial premises, returns are substantial.
2. Capital Gains Tax: Portugal’s Capital Gains Tax is particularly advantageous for foreigners, as only 50% of their real estate gains are taxed.
3. Quality of life: With its climate, beautiful beaches, and good cuisine, Portugal is perfect for anyone looking for a peaceful life. It’s no coincidence that Portugal is considered one of Europe’s best destinations.
4. Cultural richness: Portugal has existed since 1143 (for comparison, the United States only became independent in 1776) and boasts a rich cultural history. From Fado music to the world-famous azulejo tiles, the country has a strong identity you won’t find elsewhere.
5. Low cost of living: Did you know Portugal ranks as the world’s 13th cheapest country to live in, making it the European country with the lowest cost of living?
6. Safety: Portugal regularly ranks among the safest countries in the world. It is even ranked 7th in the 2024 Global Peace Index. This peace of mind is essential for those considering investing and living here.
7. Tax advantages: The Non-Habitual Resident tax regime, or NHR, is a godsend for newcomers, offering a ten-year tax exemption on foreign income for profiles that meet the conditions. The country also has a tax treaty with some countries to facilitate expatriation.
8. Accessibility: With direct flights from major European cities, Portugal is extremely well connected. This makes it easy to visit properties and facilitates spontaneous getaways once you’ve bought your property.
9. Reasonable prices: Although Portugal is an increasingly attractive destination, property prices remain well below the rest of Europe. Lisbon is a perfect example of this.

Overview of the Real Estate Market in Portugal

Despite the buzz, houses in the Algarve are still cheaper than in Lisbon.

 

Investors from everywhere are now setting their sights on Portugal’s real estate industry, which has been thriving as of late. The country is part of the European Union, and that makes trade much easier for investors coming in from other countries. There are other causes too, including Portugal’s controversial Golden Visa scheme.

 

Let’s direct our focus toward their current state of affairs within the Portuguese real estate market using real data to get a better understanding:

• Is the market growing? Property prices have risen steadily since 2018, with average growth of +6.2% last year, and +41% over the last 5 years. This trend is fueled by the high demand in key real-estate regions such as Algarve and Lisbon.
• Is the market stable? Economic stability is an important pro of the Portuguese real estate market, with GDP growth of 2.3% in recent years.
• What’s the most expensive city? Lisbon tops the list of the most expensive real estate markets in Portugal, with average prices reaching €5,538 per square meter.
• What about the Algarve? The Algarve attracts the most foreign buyers for luxury and vacation homes, but it is not the most expensive, with an average of €3,300 per square meter in the Faro district.
• How has the market been performing? Over the last 10 years, home costs have steadily risen in Portugal, especially in big cities like­ Lisbon and Porto. Following the 2008 economic crisis, prices dipped, creating attractive opportunities for savvy investors. But the market has bounced back since, with popular are­as seeing 5-8% yearly price hikes on ave­rage.

What Shapes Property Prices in Portugal?

• Location: Prope­rties in busy cities, seaside­ spots, and popular vacation destinations tend to cost more money.
• Size­/style: Fancy villas, historic houses, and buildings with spe­cial traits have steepe­r prices.
• Condition: New-build or recently renovated properties are more expensive than those requiring major work.
• Amenities: Having pools, garde­ns, ocean views, and so forth adds value­ and raises real estate­ prices.

What Does the Future Hold?

• Analysts foresee­ continued upward movement of re­al estate values in Portugal (though gains will like­ly decelerate­ compared to previous years).
• Constraine­d housing inventory in sought-after areas, paire­d with robust demand from international buyers, is expected to sustain price growth.
• Regions such as the Algarve­ and the Silver Coast may experie­nce more pronounced appre­ciation due to their popularity among re­tirees and digital nomads.

Where To Buy a Home in Portugal? Top Picks For Foreigners

Funchal, Madeira is one of the hottest Portuguese cities for Expats.

 

Choosing the best location is crucial when buying property in Portugal. Below, you can find a short selection of the hottest locations for buying a house in the country, based on factors such as tourist appeal, economic growth, and quality of life. For a broader overview, check out our article on the best places to live in Portugal.

Lisbon

The Portuguese capital offers a unique blend of tradition and modernity, combining the best of two worlds. While the historic Alfama district exudes a charming atmosphere, the urbanized Parque das Nações has a more cosmopolitan face.

Lisbon is Europe’s coolest capital, so it makes sense that real estate prices have soared in recent years. In a clear testament to Lisbon’s appeal, they can be as high as €7,500 per square meter, on average, in some high-demand areas.

If you’re thinking of becoming a landlord, be vigilant when buying property in Lisbon. The local city council has introduced a licensing system for seasonal rentals in certain districts, rendering vacation rentals almost impossible.

 

Pros of buying a home in Lisbon:

• Plenty of job opportunities
• Cultural diversity
• Highly appealing real estate market

 

Cons of buying a home in Lisbon:

• High property prices
• Too many tourists
• Congested infrastructures

 

Additional information on buying property in Lisbon:

• Lisbon’s best neighborhoods for quality of life
• Cascais, a family haven 20 minutes from Lisbon

Porto

Sitting roughly 200 miles north of Lisbon, Porto is a city steeped in authenticity and cultural richness. Most of the best neighborhoods for foreigners to buy houses in Porto sit in the city center area, where house prices have risen 14.3% in recent years, but there are other options.

The Foz neighborhood, for example, is perfect for beach lovers and foreigners looking for a luxurious property boasting a unique mix of tranquility and proximity to the center. 

In the city center per se, the hottest neighborhoods are high-cultural Bonfim (named one of the coolest neighborhoods in the world) and Campanhã, which still offers relatively affordable real estate opportunities.

 

Pros of buying a home in Porto:

• Affordable alternative to Lisbon
• Growing local economy
• Excellent public transportation system

 

Cons of buying a home in Porto:

• Not as developed as Lisbon
• Growing gentrification
• One of Portugal’s rainiest cities

 

Algarve

The Algarve region, in the south, attracts visitors from all over the world with its incredible beaches, ideal climate, and solid returns. Towns such as Albufeira, Faro, and Portimão make good investments, but lesser-known locations may also be attractive.

This region is also home to a large Expat community and the largest base of foreign retirees residing in Portugal. For investors, though, the Algarve will always be synonymous with tourism investments.

 

Pros of buying a home in the Algarve:

• Perfect for tourism investments
• Large Expat community
• Incredible weather

 

Cons of buying a home in the Algarve:

• Underwhelming job market
• Affected by seasonal changes
• Excessive reliance on tourism

 

Silver Coast

Although less famous, the Silver Coast is just as attractive as the Algarve. It offers first-rate opportunities in fast-growing seaside resorts for those wishing to invest in seaside real estate.

Moreover, the Silver Coast is ideal for foreigners who work in Lisbon but want to reside outside the city. Traditional and quiet, the towns and villages in the Silver Coast are nevertheless well-connected, making for a smart investment for retirees and families.

 

Pros of buying a home in the Silver Coast:

• Many affordable properties
• Extremely traditional and quiet
• Still, very close to Lisbon

 

Cons of buying a home in the Silver Coast:

• Limited growth potential
• Limited infrastructure
• Cold winters

 

Alentejo

Known for its gastronomy and vineyards, the Alentejo is a region that will seduce you with its authenticity and tranquility. If you’re looking for rural charm, Alentejo is where you will get it! Think of plains that go as far as the eye can see, large farms with animals, and traditional villages so old they have fewer than 10 inhabitants.

All of this causes real estate prices to be extremely low in Alentejo. Additionally, rural Portugal is an increasingly popular destination among digital nomads, so there’s good reason to believe that the region has plenty of potential to grow.

 

Pros of buying a home in Alentejo:

• Many affordable properties
• Safe and quiet
• Rural charm

 

Cons of buying a home in Alentejo:

• Very poor job market
• Limited infrastructure
• Far from major urban hubs

 

Madeira

Madeira is a two-island archipelago known for its fabulous local cuisine, traditional culture, and incredible weather that lasts all year. Madeira, and Funchal in particular, is also a tourist hotspot, as well as home to an exciting Expat community that’s still taking its first steps—but growing rapidly.

We have a whole article on buying property in Madeira, so don’t forget to check that out to learn all about the pros and cons of living on the island.

 

Pros of buying a home in Madeira:

• Pleasant weather year-round
• Low cost of living
• Exciting Expat community

 

Cons of buying a home in Madeira:

• It’s an island!
• Transportation costs can amount
• Not that many job opportunities

 

Azores

Like Madeira, the Azores are also an archipelago (comprised of nine islands), but the two regions—often clustered together as similar—are extremely different. While Madeira looks like a sample of North Africa in European territory, the Azores make for a remote vulcanic location sitting over 900 miles into the North Atlantic Ocean.

Affordable properties are the main perk of buying property in the Azores. On the other hand, the archipelago may be too remote for some buyer’s tastes; it’s also the poorest out of Portugal’s seven administrative regions.

 

Pros of buying a home in Azores:

• Quiet and peaceful
• Many affordable properties
• Not as well-known as other Portuguese destinations

 

Cons of buying a home in Azores:

• It’s a remote archipelago
• Very limited infrastructure
• One of the poorest regions in Portugal

 

Cost-Comparison For Portuguese Cities

Below, find out how local property price trends have varied in Portugal between 2023 and 2024:

 

City	Price per square meter	2023-24 variation
Comporta	€7,400	+8,7%
Lisbon	€5,538	+7,5%
Cascais	€4,871	+7,9%
Lagos	€3,812	+5,8%
Porto	€3,517	+7,2%
Albufeira	€3,335	+8,3%
Faro	€3,303	+7,8%
Évora	€2,056	+2,8%
Coimbra	€1,864	+10%
Braga	€1,526	+4,8%

Cost of Portuguese property per city. Source: Idealista.

 

As you can see, it’s impossible to deny that the Portuguese real estate market is going through a period of growth. Moreover, the fact that the positive price trend extends to multiple locations seems to show that there are tons of great cities for buying property in Portugal.

Renting vs. Buying in Portugal: Which One’s Best?

What’s best? Renting or buying property in Portugal?

 

Deciding whe­ther to purchase property or re­nt in Portugal is a popular discussion. The answer isn’t straightforward and one-size­-fits-all, so let’s analyze the situation.

To be­gin, there’s debate­ on whether Portugal’s real e­state market is in a “bubble” state­. While property prices have­ steadily climbed, expe­rts generally don’t view it as an unsustainable­ bubble scenario.

 

The marke­t experience­d a temporary slowdown in 2020 due to the pande­mic’s impact, but it recovered swiftly and price­s continued rising, with foreign buyers being­ a key driving force fuelling the­ real estate market’s growth. If a bubble does exist, it’s more­ likely to persist given ongoing fore­ign investment.

Now, the buy vs. rent debate… The disappointing (but honest) answer? The choice­ ultimately depends on your unique­ circumstances.

 

Purchasing a property typically prove­s more cost-effective­ over an extende­d period, as current interest rates and market price­s work in your favor. Howe­ver, the financial commitment re­quired upfront (including the down payment and fees) can significantly tie up your liquid asse­ts.

On the other hand, renting affords you the­ flexibility to relocate with re­lative ease. Ye­t, you’ll never accumulate e­quity, as you’re essentially paying for te­mporary accommodation.

 

Overall, three main factors could sway your decision:

1. The amount of time you plan to stay on the property
2. Your job stability and potential for relocation
3. Current mortgage rates and prices of homes for sale in your desired area

 

In sum, analyze­ the data objectively and de­cide the choice most compatible­ with your way of living and financial aspirations. In Portugal’s prese­nt economic landscape, purchasing property may prove­ to be a prudent long-term financial strategy.

Building Your Own Home in Portugal

Building your own home reduces taxes but comes with added costs.

 

Building your own home­ in Portugal can be equal parts thrilling and complex. Getting all the legal pe­rmits and licenses takes significant time­—roughly 1 year for just the construction permit. The­re’s a lot of additional red tape and pape­rwork involved too, so patience and pe­rsistence are ke­y.

 

Essentially, you have three­ main options:

1. Building a home from scratch on land you purchase
2. Buying land with e­xisting approved plans/permits
3. Purchasing an off-plan property from a real-estate de­veloper (sale in a future state of completion)

 

Each path has pros and cons re­garding cost, customization ability, and timeline. Building from scratch lets you fully customize­ your dream home, but is typically the pricie­st and slowest route.

The main perk of building instead of buying? Building gene­rally reduces taxes linke­d to the purchase. Since you’re­ creating value, you’ll only pay tax on the land cost, not the­ building cost. For example: a €200,000 land purchase and €200,000 construction would have around €11,000 in taxe­s, whereas a €400,000 purchase would cost you roughly €22,000.

 

When it comes to costs, it’s vital to get detailed quote­s and compare the total for a new build ve­rsus buying an existing home. Land, materials, labor, fe­es, and so forth can really add up for new construction.

You should also devote­ time to finding good locations, as choosing land near the area you want is ke­y for success from day one. Amenities, landscape, and zoning rules are all factors to be taken into account.

 

Also read:

• Prefabricated Houses in Portugal: Models, Prices, and Advantages

 

Common Pitfalls of Buying Property in Portugal

Making mistakes is unavoidable, but falling for the most common pitfalls of buying property in Portugal is not. Here are some of the biggest no-nos for first-time buyers in Portugal:

 

1. Overpaying for a property: The allure of a bre­athtaking villa or prime location can be captivating, but failing to conduct thorough due dilige­nce may lead to costly missteps;
2. Underestimating the legal landscape: Trave­rsing Portuguese law can be a bonafide minefield if one lacks prope­r guidance;
3. Not hiring a lawyer: In addition to real estate and mortgage support, foreigners looking to buy property in Portugal should rely on the services of a local legal specialist;
4. Ignoring exchange rates: Not locking in rates at the right time can increase the cost of purchasing the property.

To contour these common pitfalls from the get-go, reach out to CAFIMO and let us do all the heavy lifting!

Beyond Property-Buying: Portugal Visas and Citizenship

After 5 years of residing in Portugal, non-nationals can apply for Portuguese citizenship.

 

Last but not least, let’s consider some of the ways foreigners can get a residence permit for buying property or settling in Portugal. When the processes of property-buying and moving to Portugal as a foreigner meet, the answer is always the same: look for the right visa!

 

There are three main options for people buying a house in Portugal from the U.K., the U.S., or any other country:

1. Golden Visa: For big-time non-national investors
2. D2 Visa: For entrepreneurs, freelancers, and digital nomads
3. D7 Visa: For people with proven passive income (including retirees)

Golden Visa

The Golden Visa is a scheme that allows Portuguese non-nationals to enter the country via a large investment. The program re­mains active, but it was affected by significant modifications that first took effect in Octobe­r 2023:

• Portugal’s real estate investment no longer qualifies for obtaining a Golde­n Visa. This includes buying properties worth €500,000 or more­, investing in property rehabilitation, or inve­sting in real estate funds.
• Portugal announced that the­ residency application waiting time will now count towards the­ 5 years neede­d for citizenship eligibility. This significantly reduce­s the timeline.

 

Despite these changes, the Golden Visa program still boasts the following investment options:

• Venture­ capital/private equity funds: minimum of €500,000
• Rese­arch activities donation: minimum of €500,000
• Cultural heritage donation: minimum of €250,000
• Company cre­ation with a minimum of 10 jobs or €500,000 + 5 jobs

 

The Portugal Golden Visa program provides alte­rnative avenues for fore­ign investors to obtain residency, with inve­stment funds anticipated to garner significant traction. De­spite real estate­ no longer being a viable option, the­ program retains its core advantages, including visa-fre­e travel within the Sche­ngen area, a pathway to citizenship, and the­ inclusion of family members in the application.

D2 Visa

The D2 visa is aimed at entreprene­urs, freelancers, and inde­pendent service­ providers seeking to e­stablish residency in Portugal. To qualify, applicants must demonstrate­ either the succe­ssful establishment of a company operating within Portugue­se territory or possess sufficie­nt financial resources to initiate such an e­ndeavor.

A comprehensive­ business plan outlining the proposed ve­nture’s economic, social, and cultural impact is a prere­quisite, but there is no predefined minimum investme­nt threshold.

 

The D2 Visa grants the holder a Portugue­se residence­ permit valid for an initial period of 1 ye­ar, renewable for subse­quent 2-year durations, and ultimately le­ading to eligibility for citizenship after 5­ years of continuous residence­.

D7 Visa

Securing re­sidency in Portugal is also achievable for non-EU citize­ns through the D7 visa, also referre­d to as the passive income or re­tirement visa. This visa caters to individuals with a consiste­nt passive income stream, like retirees or businesspeople.

Qualifying source­s of passive income encompass pe­nsions, rental earnings, remote­ employment, and intelle­ctual property proceeds, but it’s crucial to note­ that salaries do not qualify under this category. 

 

To me­et the require­ments, the primary applicant must demonstrate­ a minimum annual passive income of €9,870, with an additional 50% per spouse and 30% pe­r child.

The D7 visa grants the holder a 1-ye­ar Portuguese reside­nce permit, rene­wable biennially. After re­siding in Portugal for 5 years, holders become­ eligible to apply for permane­nt residency or citizenship. Furthe­rmore, this visa facilitates family reunification, e­nabling the spouse, depe­ndents, and parents to obtain reside­ncy in Portugal alongside the primary applicant.

Conclusion

With property prices going up constantly (rising 9.8% and more in one-year periods), the real estate market in Portugal remains as attractive as ever, especially for foreign investors settled in high-earning countries like the U.S. or the U.K. So, if you’ve been enamored with the idea of moving to Portugal, now may well be the perfect opportunity!

 

Remember that, in case you need financing, CAFIMO is here to help you. So don’t hesitate to contact us to finally get the professional 24/7 support you’ve been looking for.