Incidental costs: Taxes and fees when buying property in Portugal in 2024

Are you dreaming of buying a property in Portugal? In our blog post, you can find out everything you need to know about the incidental costs you can expect to incur when buying a house or flat in Portugal. Roughly speaking, you can expect fixed costs of around 7 - 10 % of the purchase price.
In the following, we break this down in detail.

Non-recurring costs

1. The notary costs including registration of the property in the land register
approx. 1000 €

If you are buying a property in Portugal, you will need to hire a notary to notarize the purchase contract and ensure that it is legally valid. The cost of notarial services varies depending on the complexity of the purchase and the value of the property. Usually, you can expect to pay around €1,000, which includes these notarial services, including the registration of the property in the land registry.

2. Porperty Transfer Tax (IMT)
0 – 7.5% of the purchase price

Here you will find annually updated tables. A distinction is made according to the use as a permanent primary residence or second home / rental. For example, for a purchase price between approx. €316,000 and approx. €607,000, it is 8% minus a fixed amount of €12,170.97.

IMT Table 2024:

Table I
Mainland Portugal – Primary residence

Table II
Portugal Mainland – Second Home / Rental

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If you wish to purchase an agricultural property in Portugal, there is a different regulation. A fixed tax rate of 5 % is applied to the purchase price for agricultural land that is designated as ‘rustica’. Sometimes it can also happen that a property is divided up: One part for agricultural use and another part for development. In such cases, the purchase price is split accordingly and the IMT is calculated separately for both parts.

For other types of urban properties, such as commercial properties, building plots or properties with a tourist licence such as holiday flats in resorts, a fixed IMT rate of 6.5% applies. However, there are also holiday resorts where the flats are taxed according to the table above. These regulations make it particularly important when buying a property in the Algarve to carefully check how the property in question is classified in order to better understand and plan the tax implications.

3. Stamp duty
0.8% of the purchase price

In Portugal, the stamp duty rate is usually 0.8% of the value of the property.
Stamp duty is a government levy that is used to confirm the legal validity of documents. In the context of buying real estate, it serves to legitimize the purchase contract and ensure that it is legally valid.

4. Lawyer's fees
Approx. 1 – 1.5 % of the purchase price plus VAT

An experienced lawyer can help you to check all the documents of the property and land registry entries, prepare the sales contract, clarify legal issues and ensure that your interests are adequately represented. In addition, a lawyer can help you to communicate with other parties, such as the seller, broker, or bank, and ensure that all necessary steps are taken properly and in a timely manner. We recommend the involvement of a lawyer to ensure that the entire process is safe and smooth.

5. Financing costs
Variable

When buying a property in Portugal, loans are regularly needed for financing.
For the necessary steps in this context, such as account opening, litigation costs, registration costs, etc., there are also initial costs, depending on the bank, the loan and the individual conditions.

6. The real estate agent's commission
€0 for buyers

The brokerage fees in Portugal are waived for the buyer, as they are borne by the seller.

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Running costs

In addition to these items already mentioned, there are also running costs of your property later on.

1. Property tax – IMI
0.3% to 0.45% of the cadastral value of the property

The property tax is due annually and is based on the assessed value of the property. In general, the IMI rate in Portugal is between 0.3% and 0.45% of the cadastral value of the property. The cadastral value is determined every few years by the tax authorities and is based on the potential market value of the property.

2. Wealth Tax – AIMI
Approx. 0.7 %

Launched in 2017, the AIMI applies to properties with a cadastral value (not the purchase price is taken into account) of more than €600,000 for individuals or €1,200,000 for married couples if they are jointly assessed. This includes residential and non-residential properties such as commercial buildings, warehouses and undeveloped land.
It was introduced to increase the taxation of real estate with a high cadastral value while maintaining lower income tax rates for individuals. It is part of Portugal's tax reform efforts and is intended to help increase revenue from property taxation.
The tax liability only applies to the part above the threshold value. The AIMI rate is usually 0.7% for properties with a cadastral value above the above threshold. 1% for properties worth over 1 million euros and 1.5% for properties worth over 2 million euros.
For residents in so-called "tax havens", a tax rate of 7.5% is levied.

3. Costs of everyday life and "condominium"
Variable

When considering the running costs of owning a property in Portugal, you should not only bear in mind property taxes such as IMI and AIMI, but also everyday costs for water, electricity and possibly gas. However, as many houses and flats now have electrical equipment such as air conditioning and, increasingly, electric (underfloor) heating, gas connections are becoming less common. The costs are very similar to those in other European countries. Internet and television charges may of course also apply.
However, if you live in a residential complex with a community of owners, these costs may be covered. These are then part of the so-called "condominium costs". These costs are monthly costs for, for example, the maintenance of the outdoor facilities, the pool, the lifts, the maintenance of the garden and possibly for accessible reception staff. The amount of these costs varies depending on the size of the facility and the scope of the services offered, and can range from €50 to a few hundred euros per month.

We hope that this insight into the incidental costs helps you when buying a property in Portugal. If you have any questions or need support, please do not hesitate to contact us. Feel free to contact us at any time for more information.