Portuguese Mortgages

As Portugal is becoming an increasingly popular location for foreign property purchasers, it is not surprising that the Portuguese mortgage market is also developing at an impressively fast rate.

Additional Purchasing Costs

Get a Free Quote Additional Purchasing Costs in Portugal

Additional Costs When Buying a Property in Portugal
Purchasing costs in Portugal are far from minimal and need to be budgeted for when planning to invest in Portuguese property. There are multiple additional fees and costs that have to be met, throughout the purchasing process, many of which are essential in order to effect the transfer, so cannot be ignored!

Additional Fees and Expenses
A local solicitor is vital to ensure that your interests are protected, throughout the process. Costs may vary and should be agreed in advance of engaging the solicitor. Expect to pay around 1 to 2 percent of the purchase price for the legal work.

Estate agent fees are met by the seller. This means that the estate agent acts exclusively for the benefit of the seller. Whilst this is good news for the fees aspect of the process, buyers need to be aware that the estate agent will not disclose any information that is negative to the seller’s interests.

Estate agent fees can be as high as 10 percent and this should be considered when estimating the profits that are likely to be made when a property is sold on.

A notary is an essential part of any transaction and will ensure that the property transfer is effected, properly. Notary and registration fees normally come to around 2.5 percent of the purchase price and have to be paid immediately, at completion.

Taxation is a major issue for property purchasers in Portugal. The initial transfer tax has to be paid before the property transfer can be registered. The tax level that has to be paid will depend on the type of buyer, the type and location of the property and can be anything from zero to 15 percent of the purchase price. Your solicitor will be able to tell you exactly how much the tax liability is likely to be.

On an annual basis, a tax known as Imposto municipal sobre imóveis or IMI has to be paid and is akin to council tax that is based on the value of the property. When selling the property, there is no capital gains tax as such, but gains are taxed as income with rates of between 15 and 40 percent. There are certain reliefs available if the proceeds are reinvested within 2 years of the sale.

Fortunately, there are no restrictions on foreign ownership and no additional entry costs or arrangement fees to which a foreign owner is subjected, above those of local residents.

Summary
Bullet Point Additional fees in Portugal should be budgeted for, carefully, as many of these fees have to be paid in advance of registration of the property transfer;
Bullet Point legal fees normally amount to anything between 1 and 2 percent of the purchase price;
Bullet Point notary and registration fees may amount to approximately 2.5 percent of the purchase price;
Bullet Point taxation is a variable fee and can be as high as 15 percent of the purchase price.

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Typical Interest Payments

First Time Buyers

2.89%

Purchased Fixed

2.89%

Discounted Rate

2.99%

Buy To Let

2.99%

Commercial

3%

 

 

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