Buying property in Portugal: what is needed and how does the purchase process work?

Buying a property in Portugal is attractive to many foreign investors and individuals. The country attracts with its Mediterranean climate, stable economy and favorable tax conditions. The Algarve in particular enjoys great popularity. But what steps are necessary to acquire a property safely and successfully in Portugal? This blog post provides a comprehensive guide to the buying process in Portugal, with a special focus on the Algarve.

1. Why invest in Portugal?

Portugal offers ideal conditions for property buyers and investors. The country's stable economy contributes to a continuous increase in the value of real estate. In addition to financial aspects, Portugal convinces with a high quality of life: A mild climate with lots of sunshine, a relaxed lifestyle, excellent cuisine and Portugal is also one of the safest countries in the world, which makes this country particularly worth living in.

Regions such as the Algarve, Lisbon, Porto and Madeira are particularly sought after. They offer attractive opportunities for both owner-occupiers and investors – whether for personal housing needs or for renting. Over the past decade, property prices in the Algarve have risen by an average of 8% per year, highlighting the stability and attractiveness of the market.

Another important factor is the flourishing tourism, which is further boosting the demand for holiday properties. Many buyers take advantage of the opportunity to combine their private retreat with a lucrative holiday rental and thus achieve an attractive return.

Portugal combines economic stability, a high quality of life and strong investment prospects – a combination that makes it one of the most sought-after real estate markets in Europe in the long term.

2. The most important steps when buying real estate

2.1 Applying for a Tax Identification Number (NIF)

Before making a purchase, it is essential to apply for a Portuguese Tax Identification Number (Número de Identificação Fiscal - NIF). This number is required for all tax and legal transactions. The NIF can be applied for either in person at a Portuguese tax office or through a local representative ("Representante Fiscal"). In practice, this is usually a lawyer or tax consultant. The application by a "representante fiscal" is even possible online, so that the applicant's presence in Portugal is not required.

Since the tax number is issued at short notice after application – in the case of personal presence directly at the appointment and, according to experience, within about two working days in the case of an online application – this step could also be carried out in parallel with the following steps. However, the NIF must be available by the time of the preliminary contract (2.4) at the latest.

2.2 Choosing the right property

Choosing the right property is a crucial step in the buying process. Depending on your goals, factors such as location, condition, budget, possible uses and a potential increase in value should be taken into account. An experienced real estate agent can help you find the right property and also point out possible hidden risks. By combining the expertise of a real estate agent with the convenience of online resources, you can efficiently search for properties that meet your requirements and preferences.

At Ocean Horizon, we clarify your wishes and requirements in an initial conversation in order to be able to create a clear search profile on this basis in order to find the best properties for you. Thanks to a combination of direct listings and cooperation with partners, we carefully select properties that fit your search profile and coordinate them with you. We organize viewings individually, with an efficient schedule based on your ideas. Unlike other countries in Europe, brokers in Portugal work closely together and share the commission, which is borne exclusively by the seller. Thus, with one broker you have access to almost all available properties in the Algarve. Even if you find a property yourself on the Internet, we will organize the viewing for you. With us, you save time and energy and benefit from our local expertise and this completely free of charge for you as a buyer.

If you're still not quite sure where you want to live in the Algarve, feel free to read our blog post "The best places to buy property in the Algarve: Which location suits me? Your comprehensive guide from east to west": https://www.oceanhorizon.pt/en/detail/best-places-real-estate-algarve-guide/87679

To get a deeper insight into the current real estate market and prices per square metre in the Algarve, we also recommend the following blog post "Real estate in the Algarve of Portugal: Prices and popular regions for buyers at a glance":
https://www.oceanhorizon.pt/en/detail/property-prices-algarve-portugal-popular-regions/77862

2.3 Offer to buy

As soon as you have found the right property, you enter into negotiations and agree on the framework conditions of the transaction. Your agent will discuss this with you, submit your offer to the seller and advocate for an agreement. Elements of such an offer are the purchase price, time of purchase (deadline for the preliminary contract and the notary contract), payment methods, inventory and other special features.

2.4 Legal review and preliminary purchase contract (Contrato Promessa de Compra e Venda / CPCV)

If an agreement is reached, a lawyer should carry out a thorough examination of the legal situation of the property. Property rights, existing debts and conformity with building law are checked. This legal security protects you from unexpected problems. The following documents in particular are examined more closely during the review:

• Certidão Permanente: Extract from the property register showing the current owner and possible encumbrances.
• Caderneta Predial: Tax register extract with information about the property.
• Licença de Utilização: Usage license confirming that the building complies with building regulations.
• Ficha Técnica de Habitação: Technical data sheet with construction information (for buildings constructed after 2004).

A crucial point in the audit is the clarification of existing debts or encumbrances. A property can be fraught with mortgages, outstanding tax liabilities, or even existing leases. If you don't check these points carefully, you can unintentionally pay for the seller's legacy assets.

Especially in the case of older properties, it can be considered to additionally commission an independent appraiser to examine the building fabric for defects.

After the legal examination, a preliminary purchase contract is usually concluded in Portugal. This contract secures the transaction on both sides. It names the seller, buyer, property, the negotiated purchase modalities and some legal aspects, e.g. the right of first refusal.

As a rule, a deposit of 10-30% of the purchase price is made when the preliminary contract is signed. Buyers should be aware that they will lose this deposit if they withdraw from the purchase after signing. Conversely, in the event of non-performance of the contract, i.e. e.g. he does not sell the property to the buyer after all, the seller must pay back twice the deposit to the buyer.

Learn more about the topic "The preliminary purchase contract in Portugal: security and clarity when buying a property" here: https://www.oceanhorizon.pt/en/detail/preliminary-purchase-agreement-portugal-cpcv-property-purchase/81405

It is often agreed in this contract that the notary contract will take place within 3 months. Of course, this can be negotiated individually. Shorter deadlines can be an incentive for sellers in the negotiation. In the case of a new construction project, the time until the notary contract depends on the construction progress and further milestone payments are also common here. In this case, the notary contract can only be concluded after completion of the property, acceptance by the municipality and with the corresponding licenses available.

2.5 Conclusion at the notary (Escritura Publica de Compra e Venda)

The final purchase contract is then signed in the presence of a notary. Your lawyer will accompany you in this process or, with the appropriate power of attorney, could even take over this step without your presence.
However, the signature is only made after payment of the remaining purchase price in the form of handing over a check at the notary appointment and paying the taxes (real estate transfer tax and stamp duty). If financing has been used, a representative from the bank will be present and hand over the check to the seller. After the fees have been paid, the official entry in the land register takes place. All this is implemented at the time of the notary appointment or the entry in the land register is arranged. In terms of documents, the buyer only needs a valid passport or identity card and a tax identification number (NIF).

An identification document is also required from the seller's side. With regard to the property, the documents that have already been checked in advance, such as an extract from the land register to confirm ownership rights, etc., are required. If the property is located in a residential complex, confirmation is required that all fees have been paid by that time and that there are no debts to the management. The annual property tax must also be paid. As a rule, a standard contract is used for the notary contract, which has a smaller scope than the preliminary purchase contract, since all negotiated special features have been clarified in the preliminary purchase contract and usually have of course already been fully fulfilled by the time of the notary contract.

2.6 Registration of electricity, water and possibly gas

After the notary appointment, electricity, water and, if applicable, gas must be registered in your name. If help is needed, the commissioned lawyers often take over this as the last step in the process. Alternatively, brokers can also provide support.

3. Costs and taxes when buying real estate

When purchasing a property in Portugal, buyers should consider not only the purchase price but also the additional costs. These include the real estate transfer tax (IMT), which varies depending on the type of property and the purchase price. The stamp duty of 0.8% of the purchase price should not be ignored either. Lawyer's fees, notary fees and land registry fees usually amount to approx. 1-2% of the purchase price. After the purchase, an annual property tax (IMI) is due, which is based on the value of the property determined by the tax office (there is no reference to the purchase price). This tax is paid by the person who is registered as the owner in the land register on 31 December. In addition, buyers should plan for reserves for insurance and regular maintenance. If you would like to learn more about this, we have a detailed description in our blog post "Incidental costs: Taxes and fees when buying property in Portugal in 2025": https://www.oceanhorizon.pt/en/detail/additional-purchase-costs-real-estate-portugal/79316

4. Financing and mortgages

Foreign buyers have the option of taking out a mortgage in Portugal. Most banks finance between 60 and 80% of the purchase price. Interest rates and terms vary depending on the buyer's creditworthiness and individual bank policies. Good preparation, including all necessary documents such as proof of income and proof of creditworthiness, makes it much easier to apply for financing.

5. Cost of living in Portugal

In addition to the cost of the property, buyers should also factor in the general cost of living. Portugal is considered one of the cheaper countries in Western Europe. In our article "How much does it cost to live in Portugal? An overview of the cost of living in the Algarve in 2025", we have listed the individual items to give you a good overview: https://www.oceanhorizon.pt/en/detail/cost-of-living-portugal-algarve/88350

6. Expert support

A successful property purchase in Portugal requires careful planning and cooperation with experienced professionals. Real estate agents, lawyers and tax advisors help to overcome legal and bureaucratic hurdles and to make the purchase process smooth. Those who rely on professional support save time, avoid risks and can rely on transparent and secure processing.

The Algarve in particular is one of the most attractive regions for property buyers – whether for personal use or as an investment. With an experienced broker, an experienced lawyer and optionally the right financing, the purchase can be processed efficiently and easily.

Do you need assistance buying property in Portugal? Contact us – we will be happy to help you!

7. Checklist for buying property in Portugal

A structured approach makes the buying process easier. This checklist will help you keep track of all the important steps, some of which should also take place in parallel:

✅ Identify the budget, if necessary obtain basic "financing simulations"
✅ Finding the right property and negotiating the terms of purchase
✅ Apply for a Tax Identification Number (NIF)
✅ Have the property legally examined and conclude a preliminary contract (CPCV)
✅ If necessary, formalize bank financing
✅ Sign the purchase contract at the notary and arrange for the property to be entered in the land register
✅ Register electricity, water, gas

With good preparation and the support of experienced experts, buying property in Portugal is safe and hassle-free.