Have you considered buying an apartment or villa in Portugal? Portugal has a picture perfect climate, warm and friendly local population, great beaches and a laid back lifestyle which is prized by many. Portugal is also one of the safest countries in the world. Lisbon, the capital of Portugal, has the lowest crime ratio among all capital cities in the world.
Apart from Lisbon, the Algarve is a great place to buy a villa as well. The Algarve is similar to Costa del Sol in Spain and has an equally large expat population, but is slightly cheaper. The property market in the Algarve as well as elsewhere in Portugal is a very controlled one, there are no crazy new developments as you get to see in some parts of Spain.
The Portuguese government has taken major initiatives to encourage more foreign investors to buy property in the country. The Golden Visa scheme guarantees residency permits and travel rights across EU nations that are subject to the Schengen Agreement to non-EU investors who invest at least 500,000 EUR in Portuguese properties.
There is something for people from other European countries as well. The Non-Habitual Tax Residency scheme (NHR) guarantees zero or very low taxes to Europeans who choose to reside in Portugal. For these reasons and more, there is a huge demand for villas and apartments in Portugal.
Buying Property in Portugal – How It Works
Buying property in Portugal is as easy as it gets; however there are some rules that need to be considered. Non-resident buyers will need to hire a Fiscal Representative and get a Fiscal Number from the local tax office in Portugal to be able to purchase property here.
The financial costs of purchasing property in Portugal are much lower than in other European countries such as Spain or France. You will need to pay a Municipal Transfer Tax (Imposto Municipal Sobre Transmissões Onerosas de Imóveis) over the purchase of the property. This is an equivalent of the property purchase tax and amounts to just 0.2 to 0.8 percent.
If you are buying a newly built property, you will be charged VAT on it amounting to 20 percent.
You will need to pay 250 EUR for the Fiscal Representation. This is a recurring annual expense. Your land registry charges amount to 0.5% of the property price.
You will be required to pay 250 EUR to get the property registered and another 250 EUR to get the mortgage registered.
The estate agent’s fees are paid by the seller. You will be required to pay 1-2% of the property price to the solicitor.
You will be charged a Stamp Duty (Imposto de Selo) amounting to 0.8% of the purchase price. You will be charged separately for the Notary fees as well, which depends on the office where you get the property notarized.
It is important to hire a lawyer in Portugal as the laws in Portugal are quite complicated and it might be difficult for you as a foreigner to make sure everything related to the transaction is in order. Any lawyer hired by you in Portugal is strictly monitored by the Portugal Bar.
Portugal Property Market Outlook 2016
Portugal is in a sweet spot in 2016 as the economy has picked up and the government has dealt with the debt crisis very well. The austerity measures have had their effect, banks have been recapitalized and lending activity is now back to being how it was before the crisis. Property prices in Portugal are on the ascendency, but are still priced lower than the property market in Spain, which is Portugal’s closest competitor.