Buying a house in Portugal while living abroad

Define your objectives and budget

The first step is to clearly define your objectives when buying a house in Portugal. Ask yourself: do you want a property for personal use, a holiday home, or are you looking for an investment? Each goal may require a different type of property and location.

When setting your budget, it is important to consider additional costs such as taxes, fees, and services, which vary depending on the type of transaction and the location of the property. Assessing the potential appreciation of the region is also essential for medium- and long-term investments.

Choose the best location for your property

Portugal offers a variety of location options, ranging from urban dynamism to the tranquillity of coastal and inland regions. For those who value city life, Lisbon and Porto are the main choices, with robust infrastructure, a vibrant cultural scene, and high appreciation potential.

For those who prefer warm weather and beaches, the Algarve offers breathtaking landscapes and a strong tourism industry, making it a great option for holiday rentals. Meanwhile, inland areas and the islands, such as Madeira and the Azores, can be more affordable options, offering a relaxed lifestyle and close contact with nature.

Necessary documents for buying a house in Portugal while living abroad

Before starting the process, it is essential to gather the necessary documentation for buying a house in Portugal while living abroad. The key documents include the Tax Identification Number (NIF), which is essential for any financial transaction in the country and can be obtained from tax authorities or through a fiscal representative. The NIF is required not only for property purchases but also for opening bank accounts in Portugal and other financial operations related to income or property ownership.

Other required documents include a passport or identification document, which verifies the buyer's identity; proof of income, necessary for those applying for financing from Portuguese banks; and proof of residence, which is required when applying for a mortgage to verify the applicant's country of residence.

Financing options for foreigners buying a house in Portugal

Many foreigners choose to finance their home purchase in Portugal. Portuguese banks typically offer mortgage loans to non-residents, with conditions varying depending on the buyer’s profile and the property.

Mortgage rates in Portugal are generally competitive, but they can vary depending on the buyer’s financial situation and the chosen financial institution. For foreigners, banks usually require specific documents, such as proof of income, a tax identification number (NIF), a passport, and proof of residence abroad, to assess credit viability. Before making a final decision, it is advisable to conduct mortgage simulations with different banks, allowing you to compare conditions and choose the most suitable option for your needs.

Taxes and fees when buying a house in Portugal

To understand how to buy a house in Portugal while living abroad, it is essential to be aware of the tax obligations involved in the process.

The main taxes include the IMT (Property Transfer Tax), a tax paid at the time of purchase, with variable rates depending on the value and location of the property; the Stamp Duty, a one-time tax applied to the property's value; and the IMI (Municipal Property Tax), an annual tax paid by the owner, which also varies based on location and property type.

Additionally, there are notary and registration fees that must be considered. Seeking the support of a tax consultant is advisable to ensure compliance with all legal obligations in Portugal, as a non-resident may not be familiar with the country’s regulations.

Property purchase process and deed signing

The process of buying a property in Portugal involves several essential steps. Initially, after selecting the property, a formal offer is made, followed by the payment of a deposit, which secures the buyer’s intention and reserves the property. Next, the promissory contract of purchase and sale is signed—this legal agreement between the buyer and seller outlines all the transaction conditions.

The final stage is the deed signing, the official document that formalizes the transfer of ownership to the buyer. This takes place before a notary, ensuring the legal validity of the transaction.

Choosing a trusted real estate agency

Working with a real estate agency like Engel & Völkers is one of the best ways to simplify the home-buying process from abroad. Engel & Völkers offers full support, from property searches to signing the deed, ensuring that every step is carried out with security and transparency.

A reputable agency provides advantages such as access to exclusive properties, legal assistance, and in-depth knowledge of the Portuguese real estate market, helping buyers navigate the complexities of purchasing a home in Portugal.

Planning your move and property management

After purchasing the property, the next step is planning the move or managing the property, especially if it is intended for rental purposes. For those buying a house in Portugal while living abroad, it is crucial to consider remote property management.

One option is to hire a property manager to handle rentals and maintenance, particularly in tourist areas with high demand. Setting up an international moving plan is also essential, including hiring relocation services to facilitate the transition if needed.

Additionally, purchasing property insurance is highly recommended to protect the investment from potential damages, ensuring long-term security.

Conclusion

Buying a house in Portugal while living abroad may seem like a complicated process. However, Engel & Völkers offers a range of services to make the experience smoother and more efficient. With years of experience in the Portuguese market and a network of specialized consultants, Engel & Völkers ensures that every step of the purchase process is carried out with total transparency and security.

Understanding how to buy a house in Portugal while living abroad requires a clear knowledge of the processes, documents, and financial factors involved. This guide serves as an essential starting point, but having the support of a real estate agency like Engel & Völkers significantly simplifies the journey.

This allows you to focus on making the most of the opportunities Portugal has to offer—whether for living, investing, or enjoying unforgettable holidays.