Buying and Selling Costs in Portugal

Beyond the purchase price, buying or selling property involves other costs. Everyone involved wants his cut, from the government right down to the lawyer. The realtor and your attorney have to make a living, too. The government of course is looking for revenue and when property changes hands, it’s a perfect opportunity to take a percentage.

When deciding on the price to pay, don’t forget to figure in fees and taxes.

Buyer’s costs

Resident buyer costs run between 8.5% – 10.5%.

Property taxes vary by municipal jurisdiction.
Unless it’s a cash sale, there are mortgage costs to consider, too.

Buyer’s costs (as percentage of purchase price)

Transfer tax: 6.5%
Stamp tax: 0.8%
Registration fee: 0.2% – 1.2%
Legal fees: 1% – 2%

Seller’s costs

A licensed realtor, who is also bonded by the government, has marketing costs and overhead.

Seller pays the agent’s fees, usually 3% – 5% of the sale price, plus value-added tax (VAT) of 21%.
Word of warning, not all but some developments/resorts can charge up to 10% + Vat!
A savvy buyer will also want to be sure your property taxes and utilities are paid up to avoid being on the hook for them.
Unpaid property taxes can mean the property is auctioned off for back taxes as opposed to sold.

If you’ve sold your Portuguese home and intend to buy another:

You’re exempt from capital gains tax (up to 25%) if you buy it 2 years before or 3 years after the sale and apply the sale proceeds toward the new home purchase.

Resident or foreign buyer/seller?

Buyers and sellers are not required to be Portuguese residents.

Nonresident buyers will incur a 10% transfer tax instead of the usual 6.5%.
Different tax rates apply to resident and nonresident sellers.

Residents are subject to personal income tax on all income, even overseas income.

The tax rate ranges from 11.5% – 46.5%.
There are tax treaties to avoid double taxation, so consult a tax professional.

Nonresidents pay 20% personal income tax on Portugal-sourced income.

Income from Portuguese real estate transactions is taxed at 10%.
The capital gains tax on real-estate proceeds is quite stiff for nonresident sellers at 25%.

Thinking of living, retiring or buying property in Portugal?

Click here for guides on living in Portugal []

Click here for guides on buying real estate in Portugal []

James Harrison has lived on four continents with his family and is now the founder of PropDom:

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