What costs does a property owner bear in Portugal?
To buy a house in Portugal, one does not have to be a citizen of the country. Foreigners have the right to own any property.
Expenses on buying real estate. Obligations such as taxes, utilities and other payments come with real estate purchases. Expenses depend on whether the property is used for permanent or temporary residence or is rented out. The maintenance costs for commercial and residential premises also differ.
Buyers always pay a property transfer tax and stamp duty. In addition, there are expenses for a lawyer and notary.
Improving the energy efficiency of buildings is one of the Portugal government’s priorities. Until 2026, €610 million will be spent to reduce utility costs for residents.
Portuguese houses are heated with the help of the following:
- gas boilers are the most energy-efficient way. However, not all houses in Portugal have central heating, and the installation requires significant expenses;
- pellet stoves, heated with wood pellets. The system is connected to a flue for emission. If a building does not have a chimney, the local council checks whether it should be installed;
- electric heaters, ACs, and fireplaces are more expensive ways to heat homes. Moreover, temperature regulation with such devices is hard, and they can be noisy.
Internet, TV and telephone service prices depend on the region and plan. The average cost of such services is €50 per month.
Elevator, cleaning, repair, security, and swimming pool fees for owners of apartments in residential complexes range between €25 and €200 per month.
Property insurance in Portugal is only mandatory for mortgaged real estate. Taking out insurance is one of the conditions for issuing a loan.
The standard insurance covering fire, flooding and other destruction risks will cost between €180 and €380 per year.
Cost of utilities in Portugal
December, January and February are the coldest months in Portugal, with an average temperature of +9°C to +16°C. During this period, property owners turn on their heating systems or use ACs or fireplaces to warm houses.
Property owners in Portugal enter into contracts with suppliers to ensure that the premises have gas, light and water and pay for utilities on meters.
Electricity. Portugal's inflation rate for electricity prices is 12%, one of the lowest in the European Union. For comparison, in Belgium and the Netherlands, it is 67% and 58%, respectively.
Portuguese electricity users are charged under one of three tariffs:
- simple (simples) — where the price does not depend on the time of day;
- double (bi-horária) — the price is lower from 10 pm to 8 am;
- triple (tri-horária) — the price depends on the hours of the day and the period of the year. The most expensive hours are 8:30 am to 10:30 am and 6 pm to 8:30 pm.
Owners choose their own electricity supplier, depending on the tariff and quality of services. The largest ones are EDP, Endesa, Goldenenergy, and Galp Energia.
Gas. In some Portugal homes, gas is supplied centrally, but this is more of an exception. Gas can be purchased in cylinders: a family of three will need one for a month. The average cost of a 13-kg butane cylinder is €27, including shipping.
Water. Each of the 308 municipalities in Portugal has its own water supply provider. Water prices vary from district to district. Porto has the highest rates, while Braga and Faro have the lowest.
The average cost of utilities in Portugal by region:
- Albufeira — €145;
- Lisbon — €123;
- Porto — €114;
- Aveiro — €102;
- Algarve — €102;
- Setubal — €97;
- Braga — €98;
- Coimbra — €96;
- Funchal — €75;
- Faro — €68.
Real estate taxes in Portugal
IMT purchase tax (Imposto Municipal sobre a Transmissão Onerosa de Imóveis) is the municipal transfer tax. Buyers pay it at a 0—8% rate, depending on the cost and type of property, before signing the purchase and sale agreement.
In some cases, buyers are exempt from paying the IMT tax: for example, when buying buildings of national interest or shares in offshore companies that own Portuguese real estate.
Property transfer tax rates
| Property value | Tax rate | Tax benefit |
| Up to €97,064 | 0% | €0 |
| €97,064—132,774 | 2% | €1,848 |
| €132,774—181,034 | 5% | €5,640 |
| €181,034—301,688 | 7% | €9,087 |
| €301,688—578,598 | 8% | €11,959 |
| €578,598—1,050,400 | 6% | €0 |
| €1,050,400 and over | 7.5% | €0 |
Annual IMI tax (Imposto Municipal sobre Imóveis). Municipalities set Portugal's property tax rates and depend on the property location. On average, the rate is 0.4% of a suburban property’s market value and 0.8% of a city property’s market value.
Stamp duty (Imposto de Selo) is paid on the purchase, donation and inheritance of real estate at the 0.8% rate. Corporate transactions are not subject to stamp duty.
AIMI wealth tax (Adicional ao Imposto Municipal de Imóveis) is mandatory for owners of property with a value above €600,000. The rate varies from 0.7 to 1%.
Individual owners are taxed at the following rates:
- 0.7% on properties valued between €600,000 and €1,000,000;
- 1% on properties valued between €1,000,000 and €2,000,000;
- 1.5% on properties valued at €2,000,000 and over.
Legal entities are taxed at 0.4% on properties valued between €600,000 and €1,000,000.
Companies registered as Portuguese tax residents are taxed 7.5% on urban properties, regardless of the value.
Income tax. When the property is leased out, the owner receives taxable income. The tax is paid at 25%.
When calculating an income, payment slips can be used to deduct utility bills and repair costs.
Owners have the right to rent out real estate independently or through an intermediary such as a real estate agency. In the latter case, they will need to notarize a power of attorney and pay a commission.
When renting out real estate, a contract is drawn. If the rental period exceeds one month, the contract must be registered with the tax authorities of Portugal.
Capital gains tax is levied on the sale of any property in Portugal at a 50% rate of its value. Sellers who invest money from the deal into purchasing another house in Portugal can get a discount or a capital gains tax exemption.
Property renovation in Portugal
Homeowners in Portugal are required to maintain them in good condition: they carry out refurbishment at least once every eight years.
Owners are responsible for the safety and appearance of the property, so they regularly perform any work necessary to maintain them, such as facade repainting.
Municipal councils in each area of Portugal monitor if repairs are carried out. If owners do not implement refurbishment, councils may oblige them. Moreover, all expenses will be paid by the owner.
In situations of a building collapse risk, local authorities may decide to demolish it.
Services of management companies in Portugal
Maintenance responsibilities can be delegated to a management company. The owner determines the set of services. Most companies take care of utilities, repairs, and housework payments.
Site visits. When drawing the contract, both parties negotiate how frequently the company will conduct property checks. When needed, the company will send an employee for an unscheduled inspection; for example, if a natural disaster occurs in the area.
Prevention and repair. Checking the serviceability of heating, gas and water systems, as well as AC and swimming pool cleanings, are performed by the company workers on schedule. If repair works are necessary, the company draws up an estimate and approves it with the owner.
Payment of utility bills. The company doesn't just pay utility bills on time and measures the meter reading accuracy and if needed, analyses uncharacteristic water or electricity consumption.
Housework. Like hotel room service, management companies provide trained staff to perform household chores. This includes regular and general cleaning, laundry, and dry cleaning.
Some management companies in Portugal offer property insurance and consultations on taxes and finances. Owners can hire local architects, engineers and interior designers for reconstruction works.
Advantages of buying real estate in Portugal
Residence permit for the whole family. Foreigners can get a Portugal D7 Visa, which allows applying for a 2-year residence permit, and adding the spouse, children, parents, and siblings.
Renting or buying real estate in Portugal for any price is one of the D7 visa requirements. Applicants also must prove a passive income of at least €760 a month, or €9,120 a year.
After getting their residence permits, families can live, work, study, and become entrepreneurs in Portugal. The permits can be renewed, and after 5 years of permanent residence, families can apply for Portugal citizenship.
Profitable investment. In the third quarter of 2022, prices for real estate in Portugal rose by 13.1%. This is 30% more than in 2019.
Residential property values increased in all regions: the highest growth of 40% was recorded in the Azores and Madeira, and the lowest growth of 20% in Lisbon.
Rental income. Between July and September of 2022, rental prices in Portugal grew by 7.6% compared to the same period in 2021. The largest growth occurred in the Barcelos region, reaching 25%, and in Funchal and Cascais, reaching 20%.
Safe second home. With a Schengen Visa or a residence permit, property owners can come to Portugal anytime for a weekend or live near the Atlantic Ocean.
Portugal ranks 6th among the world's safest countries and 1st among the best countries to live in retirement. The locals are friendly to expats, and most of them speak English. Food and entertainment prices in Portugal are lower than in neighbouring EU countries.
How to buy a property in Portugal and get a residence permit
Immigrant Invest assists with selecting real estate and submitting documents needed for getting a Portugal D7 visa. Lawyers accompany the client at all stages, which are as follows:
- Passing a preliminary Due Diligence. A Services Agreement's conclusion occurs only after the investor's chances of being approved are evaluated.
- Getting a tax number. Using a power of attorney, Immigrant Invest lawyers apply and obtain a NIF number for the applicant.
- Opening a bank account in Portugal remotely. With the NIF, the lawyers open a bank account for the applicant. The applicant then transfers an amount sufficient to support their family for at least a year in Portugal to that account.
- Selecting a property remotely. Immigrant Invest provides reliable real estate offers in Portugal for renting or buying. The applicant selects a property according to their goal.
- Applying for a Portugal D7 Visa. Immigrant Invest assists the applicant in collecting the necessary documents, filling out the forms, and submitting them to a Portuguese consulate. The visa is issued within 60 days.
- Applying for a Portugal residence permit. Within the next 4 months, the applicant must arrive in Portugal and submit a residence permit application to the Portuguese Immigration and Border Service (SEF). Immigrant Invest lawyers book the appointment in advance, and the company’s representative accompanies the applicant to the meeting.
- Receiving the residence permit card. The card is sent to the applicant’s registered address in Portugal.
Key points about the purchase and real estate maintenance in Portugal
- Portuguese real estate can make a profitable investment or a personal residency such as a summer cottage or new home. Foreigners are permitted to buy residential and commercial properties without restrictions.
- Renting or buying real estate is among the Portugal D7 visa requirements. Foreigners who obtain this visa can apply for a Portugal residence permit. Immigrant Invest's lawyers accompany the buyer at all stages: from choosing a property to submitting applications.
- Property owners pay taxes when entering into a purchase and sale agreement. Other payments include ownership, rental income, or transfer taxes.
- Companies issue gas, water and electricity bills based on concluded contracts. Each supplier sets its own tariffs. Property owners choose suppliers at their own discretion.
Frequently Asked Questions
Yes, Portuguese real estate prices are growing steadily in all regions. In the 3rd quarter of 2022, prices increased by 13.1%, 30% more than in 2019.
The increase in rental prices from July to September 2022 was 7.6% compared to the same period in 2021.
The average gas, electricity and water bills in Portugal amount to €60 — €150 per month. The cost on the family composition, supplier rates, and property age.
Buyers pay the IMT purchase tax (the municipal transfer tax) and the stamp duty.
Before signing the property purchase and sale agreement, the buyer pays a transfer tax of 0 to 8%.
Stamp duty (Imposto de Selo) is paid when buying property in Portugal at the 0.8% rate. Stamp duty is also paid when donating and inheriting property. Buying real estate on behalf of an organisation is not subject to stamp duty.
Yes, owners in Portugal can delegate property maintenance to a management company. It will handle the following:
- payment of utility bills;
- repair;
- cleaning;
- renting out;
- designer and architect services.
