How can a foreigner buy residential and commercial real estate in Portugal

Buying residential and commercial property requires a different approach: legal regulations, documents, and taxes are different for each type. In this article we will consider how to prepare for the purchase, what stages should be passed and what to consider in order to make the purchase in Portugal smooth and safe.

How to prepare for a purchase: where to start?

Whether you're buying a flat in Lisbon or an office space on the coast, follow these steps.

Determine the budget and get a tax number (NIF)

Any purchase of real estate requires obtaining a Número de Identificação Fiscal (NIF), that is a Portuguese tax number. It is required for all financial transactions and for opening a bank account. Foreigners can obtain a NIF by contacting the tax office or through a lawyer if you are not yet in Portugal. 

Consult a lawyer and define the legal status of the object

The lawyer will help to make sure that the object is free of debts or encumbrances and will control the correctness of the transaction. He will also tell you what documents you will need and how to prepare for the notarisation of the transaction.

Open a bank account

Portuguese banks provide a wide range of services for foreign buyers. The account will simplify money transfers, pay taxes and help with financing the transaction.

What documents will be needed for the transaction?

There are a number of documents that need to be collected in order to purchase a property. They verify the buyer's identity, confirm the seller's ownership and show the legal status of the property. Here are the main ones:

• Número de Identificação Fiscal (NIF): tax number for all financial transactions.
• Passport or ID: an identity document.
• Certificate of ownership (Certidão de Teor) : certifies that the seller is the owner of the property.
• Energy certificate (Certificado Energético): shows the energy efficiency of the building.
• Cadastral document (Caderneta Predial): indicates the assessed value of the property, on the basis of which the taxes are calculated.
• Operating licence (Licença de Utilização): required for commercial properties.

Since 2024, many of these documents can be obtained online, making the process much easier for foreign buyers.

Buying a residential property step by step

Portugal offers many housing options for foreigners, from villas on the coast to flats in ancient city centres. The process of buying a home requires several key steps:

• Signing the preliminary contract: Once the property has been selected, the parties sign the Contrato de Promessa de Compra e Venda, which includes the terms of the deal and sets the amount of the advance payment (usually 10-30% of the value).  
• Notarisation: The main contract of Escritura Pública de Compra e Venda must be signed before a notary. The notary certifies the transaction, but does not represent anyone's interests, and only guarantees the legality of the transaction.
• Property registration: Upon completion of the transaction, the buyer registers the ownership in the Conservatória do Registo Predial. This is a mandatory step to formalize the rights to the object.

Taxes and fees

Foreigners need to consider the following taxes when buying a home:

• Transfer tax (IMT): for residential properties, the rate varies from 1% to 6%.
• Stamp duty (Imposto de Selo): 0.8% of the cost.
• Annual property tax (IMI): The rate varies by region and ranges from 0.3% to 0.8%.

Understanding taxes and fees such as IMT, Imposto de Selo and IMI will help you plan expenses and make the purchase process understandable and organized.

Purchase of commercial real estate: What do I need to know?

Commercial real estate provides more business opportunities, but requires additional permits and inspections.

The main stages for the purchase of a commercial property

• Checking permits and zoning: Make sure that the selected property meets the requirements for business use. This is confirmed by the operating license: Licença de Utilização, which can be obtained from the municipality.
• Preliminary agreement and notarisation: As in the case of residential property, the parties enter into a preliminary agreement with the terms of the transaction, followed by notarisation of the transaction.
• Property registration: The buyer must register the property with the Conservatória do Registo Predial. This guarantees the formalization of rights and protection from possible claims.

Taxes and fees for commercial real estate:

• Acquisition tax (IMT): for commercial properties, the tax is 6.5 %.
• Stamp duty (Imposto de Selo): fixed rate — 0.8%.
• Annual property tax (IMI): varies depending on the cadastral value and can reach 0.8%.

Important changes in Portuguese legislation in 2024

The Portuguese government has introduced several simplifications that make the buying process easier for foreigners:

1. Applying and getting NIF online: Now you can get your tax number remotely.
2. Electronic access to documents: Cadastral data and property certificates can be viewed online and speed up processing.
3. Simplified tourist property licensing: Tourist rental licences can now be obtained through Turismo de Portugal.

These innovations make buying property in Portugal convenient and simplify the procedure for investors.

Who should I seek advice from before buying a residential/commercial property?

For a successful property purchase in Portugal, it is important to seek the support of professionals who will help at every stage of the transaction:

• Lawyer: A lawyer will check the legal status of the object, make sure there are no debts and encumbrances, and prepare all the necessary documents.
• Notary: A notary executes and certifies the transaction, ensuring its legality.
• Accountant: Will help you understand your tax liabilities and optimise your costs, especially if you are buying a commercial property.
• Real estate agent: This specialist will find suitable options, organise property visits and take over negotiations with the seller.

Solid Sorte is ready to offer a full range of legal services, including consulting and support of transactions on purchase of real estate. Our experts will help you to:

• Check the legal compliance of the object.
• Process all documents in accordance with the legislation.
• Make sure that the transaction is conducted safely and transparently.

Working with the professionals at Solid Sorte will provide you with confidence and peace of mind at every stage of your residential or commercial property purchase.

Conclusions

Buying residential or commercial real estate in Portugal is an attractive investment that can become the basis for a comfortable stay or a successful business. Residential real estate is easier to register, while commercial real estate requires additional permits and documents, but provides more opportunities for development.

Being well-prepared, assisted by professionals and aware of current changes in the law will help you make the buying process convenient, safe and efficient.

Useful links

• Portal das Finanças: a tax portal for obtaining NIF.
• Conservatória do Registo Predial: registration of property rights.
• Instituto dos Registos e do Notariado: notary services and registration services.
• Turismo de Portugal: licensing of tourist sites.
• Portal da Empresa: online services for business and registration.