The process for a foreign citizen to buy a home in Portugal requires an understanding of certain legal, financial and documentary requirements. Whether using equity or mortgage loans, the procedures can be simple if well prepared.

Anyone, regardless of nationality, can buy a property in Portugal. The only requirement is to have a valid Tax Identification Number (NIF) in the country.

Citizens of the European Union have it easier due to the free movement of people and capital. Non-EU citizens, on the other hand, need to appoint a tax representative if they are not resident in Portugal.

The NIF (“Número de Identificação Fiscal”) is a tax and customs number that can be requested by any citizen, national or foreign, and is essential for carrying out any financial or tax transaction in Portugal, including the purchase of real estate.

To obtain a NIF, you need to have a fixed residence in Portugal (“domicílio fiscal”) or, alternatively, a tax representative in the country to handle the process. This representative can be an individual, a trusted friend or relative, or even a company or lawyer (in which case you will have to pay the costs).

The tax representative is responsible for fulfilling the obligations on your behalf. In addition, correspondence and access passwords to the Tax Portal are sent to the address of the tax representative.

If you already have a tax address in Portugal, you don’t need a representative, you just need your civil identification document from your country of origin or your passport (with a visa to enter Portugal or the Schengen Area), and your residence permit.

 

Who can ask? 

– Residents and non-residents.

– Citizens of the European Union can use their passport or civil identification document from their country.

– Non-EU citizens must present their passport and, if they do not have a permanent residence in Portugal, appoint a tax representative.

 

Where to apply? 

The request can be made at a branch of the Tax Authority (“Finanças”) or through the e-Balcão on the Finanças portal (if a representative is used).

 

Documents required: 

– Valid identification document.

– Proof of residence in the country of origin (if you do not have a tax address in Portugal).

Credit conditions for foreigners can differ from those offered to residents of Portugal. While, as a rule, credit institutions grant loans of up to 90% of the value of the property to residents, in the case of foreigners, the amount varies between 70% and 80% of the total.

 

Documents required for home loans: 

– Passport (or identification document).

– Portuguese Tax Identification Number (NIF);

– Proof of income (3 most recent payslips and most recent tax return).

– Bank statement for the last 6 months.

– Employment contract or declaration of employment.

The first stage in the process of buying and selling a property is to sign the Promissory Contract of Purchase and Sale (CPCV), which, although not compulsory, usually precedes the final contract: the deed of purchase and sale.

The conditions for an immediate deed are not always met. Imagine that the house to be sold is still under construction or the buyer is waiting for a loan to be approved: in these cases, the CPCV acts as a guarantee that protects both buyer and seller with regard to the transaction to be carried out.

Before concluding the purchase of a property, it is important to evaluate certain documents to avoid surprises:

 

– Housing Technical Form (Ficha Técnica de Habitação/ FTH): 

It details the technical and functional characteristics of the property and is mandatory for properties built or altered after March 30, 2004.

 

– Certificate of Content or Land Registry Certificate (Certidão de Teor ou Certidão do Registo Predial): 

Obtained from the Registry Office, it confirms ownership of the property, any liens or other associated charges.

 

– Legal Description of the Property (“Caderneta Predial”): 

It contains tax information on the property, such as the Tax Asset Value (VPT).

 

– Energy performance certificate: 

It indicates the energy efficiency of the property and is mandatory for buying or renting.

 

– Certificate of non-debt to the condominium

It guarantees the buyer that there are no outstanding debts to the building’s condominium.

 

It may be necessary to see other documents in certain situations.

In addition to the price of the property, there are other associated costs that we can’t forget: the down payment (usually advanced when the Promissory Purchase and Sale Contract is signed and deducted from the final payment when the deed is signed), the property valuation, registrations, the deed, taxes (Municipal Tax on Transferable Transactions, Stamp Duty and Municipal Property Tax), insurance (life and multi-risk, in the case of financing).

You should also find out how much the condominium will cost, as this is a fixed cost that you will have to bear. The annual IMI (Municipal Property Tax) depend on the municipality you choose to live in.

Costs to be borne

Most of the costs associated with the house transaction are borne by the buyer; the seller pays for the property’s documentation. The costs of the deed are borne by the buyer and there is no fixed cost, as the amount depends on the price of the purchase, its purpose (first home or other), location, among other factors.

Therefore, when signing the deed of sale, in addition to the value of the property, the buyer must also bear the following costs:

– Registration of the deed (paid to the notary or other competent authority)

If you use the “Balcão Casa Pronta”, the cost can range from 375 euros, if you didn’t need financing, to 700 euros, if you used a mortgage. If you opt for a notary’s office, find out in advance as each one has its own fees.

– IMT (Municipal Transfer Tax)

This tax must be paid before the deed is signed. The IMT will be levied on the value of the contract or on the taxable asset value (VPT), whichever is greater. The purchase of a property with a value of more than 97,064 euros, for own permanent residence, is subject to IMT. The IMT rates can be consulted on the Finance Portal.

– IS (Stamp Duty): 0.8% of the transaction value

This tax must also be paid before the deed is signed.

– IS on credit: 0.6% of the financing amount

This tax must also be paid before the deed is signed.

Buying a home in Portugal as a foreigner is possible and affordable, as long as all the legal, fiscal and documentary steps are followed. To simplify the process, it is advisable to turn to experienced professionals, such as real estate consultants, lawyers and accountants, who can help you avoid mistakes or problems at the different stages of the process.

For professional advice from a real estate agent, accountant and lawyer, consult the lists of duly registered professionals:

• real estate consultancy and brokerage on the IMPIC portal


• certified accountants on the portal of the Order of Certified Accountants


• Lawyers on the Bar Association portal

This article has been automatically translated into English.