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Portugal has become one of Europe’s most appealing destinations for property buyers, thanks to its stable legal system, clear ownership rules, and openness to foreign investors. Whether you’re considering a holiday home, a rental property, or a long-term relocation, understanding how property ownership works is essential.
From ownership rights to taxes, legal checks, and what foreigners should expect, this overview helps you navigate the process with confidence and clarity.
What Property Ownership Means in Portugal?
In Portugal, property ownership gives you full legal rights over the home or land you purchase. This includes the right to live in it, rent it out, renovate it, or sell it whenever you choose. Unlike some countries, Portugal places no restrictions on foreign property buyers, and ownership is registered under your name in the national land registry, giving you complete legal protection.
It’s important to note that owning property in Portugal does not grant residency or immigration rights on its own. It simply means you are the legal owner of the asset. You are responsible for paying annual property taxes, maintaining the property, and following local regulations, but beyond that, ownership works the same for locals and foreigners.
Types of Property Ownership in Portugal
In Portugal, there are several types of property ownership structures. The most common forms include:
Freehold (Propriedade Plena)
This is the most complete form of ownership, providing the owner with full rights over the property and the land it sits on. Freehold ownership allows for the property to be inherited or sold without significant restrictions.
Leasehold (Usufruto)
Under leasehold ownership, the owner holds the rights to use and enjoy the property, but the land itself is own by someone else. This arrangement often has a set time limit or may be based on the life of the leaseholder.
Usufruct (Usufruto)
This form of ownership grants someone the right to use and derive income from a property that belongs to another person. It can temporary or for the lifetime of the usufructuary.
Co-Ownership (Compropriedade)
Co-ownership involves two or more individuals jointly owning a property. Each co-owner has a share of the property, and decisions regarding the property typically require the agreement of all co-owners.
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Pre-Emption Rights in Portugal
Pre-emption rights in Portugal give certain parties the legal priority to purchase a property before it is sold to someone else. These rights usually apply to co-owners, tenants, neighbours of rural land, or public authorities in cases involving protected areas or heritage buildings.
When a property is put up for sale, any party with pre-emption rights must be formally notified of the price and conditions, giving them the chance to match the offer within a specific time frame.
For buyers, it’s important to confirm early on whether any pre-emption rights exist, as they can delay the transaction if not properly addressed. Your lawyer or notary will typically review the land registry, urban planning documents, and tenancy agreements to ensure all required notifications are made.
Taxes on Property Ownership in Portugal
When purchasing a property in Portugal, there are ongoing taxes and fees associated with property ownership:
Annual Property Taxes (IMI)
IMI is an annual tax based on the tax value of the property. The tax rate ranges from 0.3% to 0.8% for urban properties and 0.8% for rustic properties. You can IMI tax details cost using IMI Calculator.
Additional Annual Wealth Property Tax (AIMI)
AIMI stands for “Adicional ao Imposto Municipal de Imóveis” which translates to Additional Municipal Property Tax. It is an annual property tax in Portugal that is levied on the combined fiscal value of all residential properties own by a taxpayer as of January 1st of each year worth above €600.000.
There are three levels of AIMI Tax in Portugal:
- 0,7% on properties value between €600,000 and €1M
- 1,0% on properties valued between €1M and €2M
- 1,5% if the total properties value is over €2 million
Tax on Rental Income
If you rent out the property, you’ll need to pay an income flat rate tax of 28% on the rental income generated. You may consider deductible expenses that include property management fees, repairs and maintenance costs, insurance premiums. And also local property taxes (IMI), financing costs such as loan interest, and other relevant expenses like advertising and professional fees.
Non-resident individuals may have the option to be taxed under the Non-Habitual Resident (NHR) regime or applicable tax treaties.
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Home Insurance in Portugal
Home insurance is an important part of owning property in Portugal and is legally required for apartments under horizontal ownership. There are two main types of coverage available, offering different levels of protection depending on your needs.
The mandatory option is Fire Insurance (Seguro de Incêndio), which protects the property against fire damage and often includes events like storms, floods, electrical faults, lightning, and explosions. It ensures the building’s structure is covered, which is essential in shared buildings.
Many homeowners choose Multi-Risk Insurance (Seguro Multirriscos) for more complete protection. This policy can cover personal contents, public liability, legal support, earthquake damage, and even temporary accommodation if the home becomes uninhabitable. It provides a wider safety net and added peace of mind for property owners.
Inheritance Property Tax
In Portugal, there is no specific inheritance tax, known as “Imposto sobre as Sucessões e Doações,” imposed on the transfer of assets to beneficiaries upon an individual’s death. Unlike some other countries, Portugal does not levy a tax based on the value of the inherited assets or the estate left behind. Instead, Portugal applies stamp duty, known as Imposto do Selo, which is a tax on certain legal acts and documents, including property transfers.
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Local Expertise
We know Portugal. Due to our extensive local knowledge, we believe that concentrating our services in a single country destination is the best way to give you the most thorough and useful information.
Holistic Approach
We offer a streamlined communication channel for the entire process. Which will be delivering a comprehensive service that encompasses all facets of your real estate investment journey. It’s include property search, negotiation, legal matters, due diligence, and property management.
Independent Service
As an independent buying agent, we have the flexibility to collaborate with any agent, seller, promoter, or developer, providing you access. This access to all available options in the real estate market. This enables us to objectively analyze every opportunity and find the right property for you at the best price, free from complications.
Simple Process
Technology plays a significant role in our company, allowing us to provide you detailed property market information and minimize our clients’ involvement in paperwork. As customers ourselves, we understand how to best serve your needs.
Frequently Asked Questions
Can foreigners buy property in Portugal?
Yes, non-residents can buy property in Portugal with some restrictions on certain types of properties.
What is the process for purchasing property in Portugal?
The process typically involves signing a promissory contract, paying a deposit, and then completing the purchase at the notary’s office.
What are the associated costs of buying property in Portugal?
Costs may include property transfer tax, notary fees, legal fees, and potentially real estate agent commissions.
Do I need a lawyer for the property buying process?
While it’s not mandatory, hiring a lawyer is highly recommended to navigate legalities and ensure a smooth transaction.
How does the property tax system work in Portugal?
Portugal has a property tax known as IMI (Imposto Municipal sobre Imóveis), which is an annual tax based on the property’s fiscal value.
Can I get a mortgage as a foreigner in Portugal?
Yes, non-residents can apply for a mortgage in Portugal, and several banks offer mortgage products for foreign buyers.
Are there any restrictions on renting out my property in Portugal?
Generally, there are no significant restrictions, but you may find some limitations for obtaining short rental licenses in some Lisbon parish.
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