Buyers Closing Costs
When you buy a property in Portugal, there are a number of expenses you will need to budget for.
Whilst these can vary from property to property based on the agreed sale price, property type, and usage, we advise that you budget 10% of the purchase prices as a guideline, in order to cover these.
The table below will provide you with an outline in percentages as to what to budget when it comes to the closing costs for buying a property in Portugal, based on the value of the purchase you make.
The overview below will provide you with a little further detail on each of these elements
Property transfer tax (IMT - Imposto Municipal sobre Transmissões Onorosas de Imóveis)
The transfer tax is levied by the Portuguese government and is based upon the purchase price or patrimonial value of the property (which ever is higher). It is calculated on a sliding scale and payable to the Portuguese tax office (Autoridade Tributária Aduaneira or in Laymans terms - Finanças) ahead of the final deed signing.
There are two different scales, depending on whether the property is a primary or secondary residence.
Stamp Duty (Imposto de Selo)
As a buyer you will need to pay stamp duty on deeds and mortgages. The rate varies depending on the type of deed or operation - between 0.4-0.8%.
When purchasing a property in Portugal, you will pay the stamp duty to the notary on the signing of your deed. The rate is calculated at 0.8% of the final purchase price.
If opting to finance the purchase with a mortgage, there will also be stamp duty payable. Depending on the repayment terms this can vary from 0.5-0.6%.
However, if you are purchasing a property held in corporate ownership, stamp duty is not applicable.
It is recommended that you hire a lawyer to oversee your property purchase in Portugal, and when choosing one, ensure they are experienced in property law. They will carry out all the necessary searches and prepare the documents and contracts needed for signing both the promissory contract and the final deed. Generally, most lawyers will charge for between 1-1.25% of the total purchase price, for their services.
Notary and Registration Fees
In order to legally complete the purchase of a property in Portugal, the final deed must be notarised. To formally record the transfer of property to you, in addition to signing of the final deed, they will oversee and arrange the updated land registration certificate on your behalf. Notary fees are regulated, nevertheless budgeting for 1-2% is a good rule of thumb.
Optional Additional Costs
Whilst we have covered all the mandatory costs you can expect to pay in the previous paragraphs, there are also optional elements that you may choose to include.
Should you decide to finance the purchase of your property, then you will need to factor in the costs of borrowing, aside from the interest rates attached to the loan value. These can vary depending on the loaner, the property and the terms of borrowing. If you choose to work with a mortgage broker, they will include all of these costs in the proposals. They are also best positioned to work on finding you the best deal when it comes to borrowing. Mortgage brokers will normally charge you approximately 750€ to handle the process from start to finish, in addition to the banks own arrangement fees.
Appraisals are mainly conducted by banks if they are providing you with funds to purchase your home. This is in order for them to verify that the value of the property meets with the loan amount you are requesting. Whether you are having to complete an appraisal as part of the approval process or looking to do an independent appraisal for your own knowledge, you can expect to pay in the region of 500-800€
Home Inspection (Survey) Fees
Whilst home inspections are not compulsory in Portugal, we always suggest it is a good idea to have a building survey completed to ensure the property you are purchasing is up to standard and there are no hidden problems. When contracting a home inspection you will receive a home survey along with a full written report. This can be beneficial in helping your lawyer to assess if there are any illegalities that you should be aware of. The cost of a home inspection will vary depending on the size and type of property you are purchasing but you should budget for around 300-500€
However please note that this is just an indication and a full breakdown is always provided for you by your lawyer at the time, as rates may change in line with budget reviews.