Real Estate | Portugal
Overview
Portugal has long been a popular choice for expatriates. In general, the cost of living in Portugal is low in comparison to other European countries, and there are several advantages to purchasing real estate in the country. Portugal’s non-habitual resident tax regime provides excellent tax benefits including a set 20% tax on personal income over a 10-year period and no double tax charges on self-employment, employment, or pension income derived from abroad.
Holding period of real estate: Minimum of five years
Minimum real estate investment: EUR 280,000
Type of ownership: Shared ownership
Rental income opportunity: 3–5 %
Are there any restrictions on the acquisition of real estate in Portugal by foreign buyers?
There are no restrictions on foreign buyers purchasing a property in Portugal. The only pre-requisite for potential buyers is having a Portuguese tax number, which is needed at the time of purchase.
How can immovable property in Portugal be acquired?
Immovable property in Portugal can be acquired locally or remotely (that is, it is not essential to be in the country at the time of acquisition). The real estate industry in Portugal exists as it does throughout Europe and has evolved towards a more interactive and online approach, such as through virtual tours, which is particularly beneficial to potential foreign buyers.
Does the applicant need to open a bank account in order to purchase property, and if so, what is the procedure?
The applicant must have a Portuguese bank account as well as a Portuguese taxpayer number when purchasing a property. Assistance is provided in preparing all the necessary documentation for acquiring a taxpayer number and opening a bank account, and this can be done locally or remotely.
What additional expenses will the real estate transaction incur?
Anyone purchasing a property in Portugal will pay property transfer tax, stamp duty, notary fees, and registration fees (signing of the title and registration of the deed is done at the land registry). Stamp duty is fixed at a rate of 0.8%. Deed costs vary according to the purchase price. Registration costs are EUR 250 per property. Other property transfer taxes include rustic articles at 5% and commercial, services, or land tax at 6,5%.
What kind of returns can be expected from property investment in Portugal?
Net yields range from 3% to 5% on residential property, 5% to 6% on commercial property, and 7% to 8% on industrial property.
How is rental income taxed?
Rental income is taxed at a flat rate of 28%. All expenses related to the property are deductible, such as insurance costs, levies, monthly costs, municipality tax, rental and property management fees, and any maintenance done on the property prior to or during the rental period.