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Buying a home in Portugal: the process step by step
Buying a home is one of the biggest financial decisions you will make, and in Portugal the process has its own steps and documents. This guide sets them out in the order they usually happen, with what to prepare at each one and where to check the rules in force.
How much you can spend: budget and buying costs
The price of the home is not the only amount you will pay. On top of it come taxes, the costs of the deed and the land registration and, if you take out a mortgage, the bank's charges. Work out the full cost before you start viewing homes, so that you search within the right budget.
If you will need a mortgage, speak to a bank or a credit intermediary at the very start. A simulation tells you how much the bank is likely to lend and what the monthly repayment would be. In most cases the bank does not finance the full value of the home, and the part that is missing, the deposit, comes from your savings.
For your budget, add up:
- the price of the home
- IMT and stamp duty, explained further down
- the deed and the registration
- the mortgage costs, if you take one out: the bank's valuation of the home, fees and insurance
- some margin for the move, building work or furniture
There are support schemes and exemptions for young people buying their first permanent home, that is, the home where they will live and have their tax address. The conditions change often: check the ones in force on the Portal da Habitação (the government housing portal) and the Portal das Finanças (the tax authority's portal).
The documents you will need
To buy a home you need a valid identity document and a NIF, the tax number issued by the Portuguese tax authority (Finanças). People who live outside Portugal may have to appoint a tax representative; the rules are on the Portal das Finanças. If you take out a mortgage, the bank will also ask for proof of income.
The documents for the property are gathered by the seller, but it is worth asking for them and reading them before you sign any contract:
- Caderneta predial:
- the property's record at the tax authority, with its identification, its area and its taxable value (valor patrimonial tributário), the value the tax authority uses to calculate property taxes.
- Certidão permanente do registo predial:
- the land registry certificate. It shows who owns the property and whether there are mortgages, charges or other encumbrances on it. It can be viewed online with an access code.
- Energy certificate:
- rates the energy efficiency of the home and is compulsory for a sale.
- Licença de utilização and ficha técnica da habitação:
- the occupancy licence, which confirms the property can be used as a home, and the technical file, which describes how it was built. The rules on when they are required at the deed have changed in recent years; whoever handles the deed will confirm what applies to your purchase.
For a flat, also ask for a statement from the building's management (condomínio) showing any unpaid service charges and any works already approved. It saves you from inheriting costs you did not know about.
Searching for a home and viewing it
Decide what is essential and what is negotiable: area, layout (in Portugal shown by the number of bedrooms: T1 is 1 bedroom, T2 is 2, T3 is 3), floor area, condition, parking and transport. A short list helps you compare homes and decide faster when the right one comes along.
At viewings, look beyond the decoration. Signs of damp, the condition of the windows, the plumbing and the electrics, how much sun the home gets and the noise all affect comfort and future costs. If you can, go back at another time of day. For a flat, ask about the service charge and the condition of the shared areas.
If you have doubts about the condition of the building, a survey by a qualified professional before you make an offer can prevent expensive surprises.
Making an offer and negotiating
When you find the home, make your offer in writing, with the price you are offering and the conditions that matter to you: the deadline for the deed, what stays in the home (appliances or furniture) and, if you need a mortgage, that the purchase depends on the bank's approval.
The asking price is often a starting point. Comparing it with recent sales of similar homes in the same area gives you a solid basis for negotiating.
The promissory contract (CPCV)
Once the price is agreed, buyer and seller usually sign a promissory contract of sale, known as the CPCV (contrato-promessa de compra e venda). In it both parties commit to completing the deed, with the price, the expected date and the terms of the sale.
When the promissory contract is signed, the buyer normally pays a deposit (sinal): an amount paid in advance, which later counts towards the price. Under the general rule of the Portuguese Civil Code, if the buyer pulls out, they lose the deposit; if the seller pulls out, they must pay it back twice over. The contract can provide for other arrangements, so read every clause carefully.
Before signing, check that the promissory contract states:
- the full identification of the parties and of the property, matching the land registry
- the price, the amount of the deposit and how the rest will be paid
- the deadline for the deed and who arranges it
- what happens if the bank refuses the mortgage
- that the property is handed over free of mortgages and other charges
A lawyer or a solicitador (a legal professional who can also handle property deeds) can review the contract before it is signed, especially if the sale has unusual conditions.
IMT, stamp duty and other costs
Before the deed, the buyer pays two taxes to the tax authority:
- IMT:
- the property transfer tax (Imposto Municipal sobre as Transmissões Onerosas de Imóveis), paid by the buyer. The amount depends on the price (or on the taxable value, if that is higher), the location and the use of the home: the rate is different for the home you will live in and for a second home or an investment.
- Stamp duty (imposto do selo):
- a percentage of the purchase value, also paid before the deed. If you take out a mortgage, there is also stamp duty on the amount of the loan.
The rates change with each State Budget. The Portal das Finanças lets you simulate IMT and stamp duty and gives you the amount for your case.
Add the costs of the deed and the registration, which depend on where and how they are done, and, if there is a mortgage, the bank's valuation of the home, fees and insurance. After the purchase, you pay IMI every year, the municipal property tax, calculated on the taxable value at a rate set by each local council.
The deed and registering the home
The deed (escritura) is the moment the home becomes yours. It can be signed at a notary's office, with a lawyer or solicitador (in a document they certify) or at a Casa Pronta office, a government service that handles the deed and the registration in one go.
On the day, buyer and seller sign, the rest of the price is paid and, if there is a mortgage, the bank signs the loan agreement and the mortgage. Bring your identity document and proof of payment of IMT and stamp duty.
After the deed, the purchase has to be entered in the land registry in your name. At Casa Pronta this happens straight away; otherwise, confirm who is handling the registration and ask for the updated certificate.
Once you have the keys:
- transfer the electricity, water, gas and internet contracts into your name
- if you bought the home to live in, change your tax address within the deadline set by the tax authority, so as not to lose the tax benefits of the purchase
- keep the deed, the registry certificate and the tax receipts: you will need them if you ever sell
Where to check the information
- Portal das Finanças: the Portuguese tax authority: NIF, IMT, stamp duty, IMI and a simulator for the taxes on a purchase.
- Portal da Habitação: the government housing portal, with public support for buying a home.
- Portal do Cliente Bancário: what to know before applying for a mortgage, from the Banco de Portugal.
- Portal da Justiça: the Ministry of Justice portal: land registry certificates and Casa Pronta offices.
Every purchase has its own particulars. For your case, speak to a lawyer, solicitador or notary about the contract and the deed, and to a bank or a credit intermediary about the financing.
