Portugal

Buying Property in Portugal: Taxes, Costs, ROI, Property Maintenance, Residence Permit

Buying Property in Portugal: Taxes, Costs, ROI, Property Maintenance, Residence Permit

Portugal has become one of the most attractive destinations for real estate investment in Europe. With a warm climate, rich cultural heritage and previously available lucrative residency programs, many foreign buyers are considering purchasing real estate in Portugal.

Currently, the option to obtain a residence permit through direct purchase of real estate is no longer available. Obtaining a residence permit in Portugal through the purchase of real estate remains, but not directly, but through funds). Before buying, it is important to understand the associated taxes, costs, possible return on investment, responsibilities for maintaining the property and the procedure for obtaining a residence permit.

Taxes and expenses when buying real estate

  • Stamp duty – 0.8% of the property value
  • Importance Transfer Tax (IMT) – 6.5%
  • Property Tax (annual) – 0.3-0.8% of the cadastral value of the property
  • Rental Income Tax, if the owner rents out the property - 25%

Additional services

  • Medical insurance – from 400 euros per person
  • TIN (Portuguese TIN and surety for one year) - 400 euros
  • Opening a bank account (preparation of documents, support to the bank, correspondence with the bank, support of the process) - about 1000 euros

Property Maintenance Costs

Owning property in Portugal involves ongoing maintenance and operational expenses, including:

Annual Property Tax (IMI - Imposto Municipal sobre Imóveis)

  • Ranges from 0.3% to 0.45% for urban properties and 0.8% for rural properties.

Condominium Fees (for apartments or gated communities)

  • Varies from €50 to €300 per month, depending on amenities and services.

Utilities and Insurance

  • Electricity, water, and internet bills depend on usage, averaging €100 to €250 per month.
  • Home insurance costs start from €200 per year.

Property Management Services (if renting out the property)

  • Fees range from 5% to 10% of rental income.

Return on Investment (ROI) and Rental Yield

Portugal offers attractive ROI opportunities, especially in cities such as Lisbon, Porto, and the Algarve region. Key factors influencing ROI include:

  • Rental Yield: Depending on the location and type of property, gross rental yields typically range between 4% and 7%.
  • Capital Appreciation: Over the past decade, Portugal has seen property prices rise steadily, making it a profitable investment.
  • Tourism Demand: Short-term rentals in tourist hotspots generate higher income than long-term leases.

Obtaining a Residence Permit Through Real Estate Investment

In 2024, the Portuguese parliament adopted changes to the Golden Visa program, which exclude the option of direct purchase of real estate from the available investment options. Obtaining a residence permit in Portugal through the purchase of real estate remains, but not directly, but through funds.

One of the available investment options includes the transfer of capital equal to or exceeding €500,000 to purchase shares in certain funds.

What is needed to obtain a residence permit in Portugal?

Developers must have open funds to which they invite investors. The investor invests at least €500,000 and receives real estate as collateral. Which, in turn, is the basis for applying for a residence permit in Portugal.

Write to us info@mercuryestate.com and we will promptly advise you on the conditions for obtaining a "Golden Visa" in Portugal, the cost of real estate, rental rates, taxes.

Currently, investors are not able to directly invest in real estate under the program. Instead, the investment options offered include:

  • A transfer of capital equal to or greater than €500,000 for research activities in public or private research institutions integrated into the national scientific and technological system.
  • A transfer of capital equal to or greater than €250,000 for investment in or support for artistic production, restoration or conservation of national cultural heritage through public institutions, special public or private foundations.
  • A transfer of capital equal to or greater than €500,000 for the acquisition of shares in certain funds with a maturity of at least five years at the time of investment and at least 60% of the value of the investment in commercial companies.
  • Transfer of capital equal to or greater than €500,000, intended for the incorporation of a commercial company with its registered office in Portugal, combined with the creation of five permanent jobs, or for the strengthening of the share capital of an existing commercial company, with the creation of five permanent jobs or the maintenance of at least 10 jobs, for a period of at least three years.
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Best real estate deals in Portugal

€ 1 020 000 Apartment, For sale
ID: PT-175-163050 Portugal, Algarve, Lagos
€ 890 000 Apartment, For sale
ID: PT-175-119025 Portugal, Porto Metropolitan Area (North Region), Matosinhos
€ 735 000 Apartment, For sale
ID: PT-175-119024 Portugal, Porto Metropolitan Area (North Region), Matosinhos
€ 1 250 000 Mansion, castle, estate, For sale
ID: PT-175-119019 Portugal, Porto Metropolitan Area (North Region), Vila Flor
€ 2 800 000 Mansion, castle, estate, For sale
ID: PT-175-119018 Portugal, Porto Metropolitan Area (North Region), Barcelos
€ 750 000 Investment project, For sale
ID: PT-175-119017 Portugal, Porto Metropolitan Area (North Region), Porto
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