If you've lived in Portugal for a while and plan to build a future in this country, you may want to explore options beyond rent and look into buying property. You may also be pleased to learn that buying property in Portugal can be a great investment opportunity. This article looks into the process of buying property in Portugal, real estate investment opportunities, property prices, and more.
Is it worth buying property in Portugal?
Portugal has a booming real estate market. Even in the aftermath of the COVID pandemic, real estate prices continue to rise, and properties in popular regions are selling like hotcakes. In fact, the situation has got nearly unbearable for locals, as EU authorities in Brussels have repeatedly alerted that property prices in Portugal are overvalued, to the point regulatory controls on house prices are highly recommended (though their recommendations have fallen on deaf ears). Be that as it may, there are several reasons for Portugal's popularity in the real estate world.
For starters, Portugal is currently a very popular destination for expats, digital nomads, tourists and immigrants alike, having welcomed over 30 million visitors in 2024 alone. Thus, renting out the property you own during the high season used to be quite profitable, leading to further speculation in property prices. To tackle this issue, local councils in Porto and Lisbon have decided to suspend the issuance of new permits to run Airbnbs in the cities, so you won't be able to rent your property to tourists (legally) if you're away. Still, these suspensions aren't definitive, so the situation can change at any moment. According to local law, rental contracts must have a minimum term of 12 months. Keep in mind that the rental income tax rate in Portugal currently stands at 25%, with repair and maintenance costs being deductible. Plus, you can get a tax discount if you choose to rent your property long-term for 5, 10 or 20 years (with tax rates of 15%, 10% and 5%, respectively).
Moreover, with social unrest rising due to the fact that people are no longer able to buy or rent in the cities they work or study in, the local government has also made huge changes to the ever-popular Golden Visa Scheme, which means foreign investors can no longer live legally in the country and apply for citizenship after 10 years just for buying 500,000鈧� worth of property in the capital.
Finally, although Portugal used to boast a pretty friendly tax scheme for foreign residents, the government has made significant changes to the Non-Habitual Residents (RNH) scheme in 2024. This code provided tremendous tax benefits for digital nomads establishing themselves (and their businesses) in the city for a period of 10 years. Right now, though, the new program is called IFICI) and only applies to highly qualified and skilled professionals, such as college teachers or tech workers. If your line of work falls within one of the designated categories, you can still enjoy a flat 20% tax on your income, a percentage that Portuguese workers (or foreign workers without the digital nomad visa) reach when earning over 2,432鈧�/month. That being said, if you make more than that amount, you'd be saving on taxes by adhering to the visa.
As you can see, property purchase in Portugal is not all sunshine and rainbows. Expats may have to deal with complicated purchase procedures (especially when taking out a mortgage), high taxes, expensive legal fees, deceitful real estate agents, and an overall poor attitude from the locals, which has been regarding digital nomads as one of the main causes, along with tourism and mass immigration, for the current housing crisis.
This is why it is absolutely essential that you do proper research before committing to a property purchase.
Average property prices in Portugal
Although property prices have been on the rise and rent values are downright ludicrous for the local purchasing power, outside Lisbon, Portugal still offers some of the most affordable real estate in Western and Southern Europe. And though the capital city can no longer be considered (by all means) the 鈥渃heap deal鈥� it once was, Porto can still be quite affordable if you're coming from North America, Scandinavia and Western Europe. Be that as it may, property prices continue to rise and the overall scenario is changing swiftly. In 2025 alone, average home prices went up by 18% in a single year, echoing the left-wing concerns that the current government's public financing and tax exemption policies for 1st-time home buyers (more on that later in this article) would lead to a spike in demand, property prices and speculation. Your average Portuguese home is now for sale for 鈧� 414,000, 475 times the national minimum wage.
Since January 2015, the average square meter price in Lisbon has gone up from 1,300鈧� to a staggering 4,360鈧�. In central Lisbon, in neighborhoods like Baixa, Bairro Alto, Chiado and Rossio, property prices have risen to 5,720鈧� per square meter (May 2025 figures), an extraordinary 160% leap in just a little over 10 years! According to stats from , one of the country's biggest real estate portals, average listings in Lisbon cost 650,000鈧�, a 33% spike compared to 2024.
Unsurprisingly, the same thing goes for Porto, with the city experiencing the highest property prices ever recorded. If we also look at the numbers since January 2015, the average square meter price in the metropolitan area has gone up from 994鈧� to 2,926鈧�. In the city center, in neighborhoods like Cedofeita, Santo Ildefonso, 厂茅 and S茫o Nicolau, property prices have reached 4,550鈧� per square meter (June 2025 figures), which translates to a 355% increase. Imovirtual states that your average home is Porto is currently listed for 395,000鈧�, 14% more compared to last year.
As for other towns in Portugal, things aren't looking up either when it comes to new listings:
- Aveiro: 340,000鈧�
- Beja: 183,000鈧�
- Braga: 340,000鈧�
- Coimbra: 250,000鈧�
- 脡惫辞谤补: 259,000鈧�
- Faro (Algarve): 535,000鈧�
- Leiria: 299,000鈧�
- Madeira: 590,000鈧�
- 厂补苍迟补谤茅尘: 237,000鈧�
- S茫o Miguel (Azores): 385,000鈧�
- 厂别迟煤产补濒: 440,000鈧�
- Viana do Castelo: 287,000鈧�
As of now, there is no official data on property prices for different types of housing. However, traditionally, homes are obviously more expensive than apartments and studios.
The process of buying property in Portugal
Documentation required for buying property in Portugal
The majority of Portuguese residents own the properties they live in. Renting is, of course, also popular; however, owning a home is significantly more prevalent. Generally, there are no restrictions or complications for expats who want to purchase property in Portugal, though things are changing quickly, and certain political parties have been calling for a ban on the purchase of houses/apartments by foreign citizens.
To purchase property in Portugal, you will need to go through several steps:
First, you will need to apply for a tax ID number (N煤mero de Identifica莽茫o Fiscal aka N煤mero de Contribuinte). The process is quite straightforward, and you will easily get the papers you need from your local tax office. To make things even easier, you can start by opening a bank account in Portugal (you will need one to purchase property), and you will automatically get a tax ID number.
Once you have found the property you are interested in, it's time to make an offer. This is the key part of the buying process, and it's highly recommended to have an independent solicitor by your side to guide you through this stage. You will also need to employ a notary to oversee the transaction. You can search for one locally or through a large directory like the European Directory of Notaries. If your offer is accepted, your notary will review the transaction and check the property you are about to buy. They will typically do so via the Land Registry and Inland Revenue to make sure there are no outstanding issues with the property you are about to buy.
After agreeing on a price with the seller, you will have to sign a Contrato de Promessa de Compra e Venda (CPCV), a legal contract where both you and the other party agree to move forward with the deal and set a completion date for the transaction. Usually, a deposit is agreed upon as a guarantee. If you back down from the deal, the seller gets to keep your deposit. On the other hand, if it's the other party that breaches the contract, they are legally obliged to return your deposit in double. Should you need to take a bank loan, please be aware that banks are only able to lend 90% of the total loan value, meaning you need to have the remaining 10% as a down payment.
Finally, you will need to sign the Deed of Purchase and Sale (Escritura P煤blica de Compra e Venda), after which you can register the property in your name.
Where to look when buying property in Portugal
If you are new to Portugal and are not familiar with the real estate market, it's best to work with an experienced local estate agent.
Real estate agents in Portugal need to be government-registered and in possession of a license number (Associa莽茫o de Mediadores Imobili谩rios). To find out if the agent you are planning to work with is officially registered, you can contact the .
Another important thing to keep in mind when working with a real estate agency is that real estate agents in Portugal work in the interests of the seller since they are the ones paying their commission fee. The good thing about this is that you won't have to pay agent fees when purchasing a property. On the other hand, the real estate agent will look out for the seller's interest before yours, which is why it is good practice to also take independent advice before signing any contracts.
If you do decide to go through a real estate agency, here's a list of the biggest institutions in Portugal:
Taxes on property purchase and sale in Portugal
Transaction costs associated with purchasing property in Portugal are quite high. You should expect to pay the IMT (tax over property transactions), stamp duty, the cost of the House Deed, and, if you need to rely on a loan, the respective banking fees (stamp duty). As an example, if you want to buy an apartment in Portugal for 250,000鈧� and do not need financing, expect to pay 7,247鈧� for IMT, plus 2,000鈧� of stamp duty (0,8% of the total sale) and around 1,000鈧�/1,500鈧� for the House Deed. If you need a bank loan for 90% of the purchase value (the highest cap in Portugal), you should add 1,350鈧� (0.6% stamp duty for a 200,000鈧� loan) to the tally.
In 2024, the government approved a new legislative package seeking to support people under 35 to buy their first homes. As many people struggled to leave their parents' nest due to house prices, legal residents (foreigners included) between 18 and 35 can now rely on the State to finance up to 10% of the property price. Before, buyers needed to have those 10% as a down payment, as banking institutions are only authorized to lend up to 90% of the property value. Furthermore, this new legislation exempts new buyers from most taxes related to the process of buying a home, such as the IMT (tax over property transactions) and its respective stamp duty. It's important to note that this exemption only applies to people buying their first home and whose annual income does not surpass 83,696鈧�. Also, there is a 450,000鈧� cap on the property price so that buyers can take full advantage of the program. As long as they are residing legally in the country, immigrants, expats and digital nomads can also take advantage of this tax exemption and public financing.
If it's the other way around and you're trying to sell, you should expect to pay real estate agent fees (usually 5% of the sale value), value-added tax over those fees (23% VAT), and other related legal fees. Plus, if you don't invest your capital gains into another property, you will have to pay income tax (IRS) on over 50% of the amount you made. For example, if you had originally bought your property for 200,000鈧� and are now selling it for 250,000鈧�, you've had a capital gain of 50,000鈧�. However, you can deduct repairs, maintenance expenses and real estate agent fees.
For simplification purposes, let's assume you never had any other deductible expenses aside from the agent fees (5% of 250,000鈧� = 12,500鈧�). This sum will be deducted from the initial 50,000鈧�, bringing your capital gains down to 37,500鈧�. As mentioned above, the IRS will only be applicable to 50% of your gains, which means 18,750鈧� will be subjected to tax. If you are a legal resident and pay your taxes in Portugal, the amount you will effectively pay will depend on your other sources of income and annual deductions, with current tax brackets ranging between 14.5% and 48% (for higher-income households/individuals). However, if you're living in another EU country, an additional 5% will be added to your bracket as a 鈥�solidarity tax鈥�. Finally, if you live and pay taxes outside the EU, then you will have to pay a 28% flat tax on 100% of your capital gains: in this case, you'd pay 10,500鈧� (37,500 * 28%) just in taxes for selling your property.
Property tax in Portugal
Property tax (IMI 鈥� Imposto Municipal sobre Im贸veis) is paid by property owners in Portugal. IMI is managed by your local municipality and is calculated based on the value of your home. Keep in mind this doesn't necessarily apply to the amount you paid for the property but to the VPT (Valor Patrimonial Imobili谩rio), an index that takes into account the size of the property, how old it is, and where it's located. Considering housing prices in Portugal are through the roof, the VPT is usually lower than the current property market values (translating to lower taxes). If you live in an urban area, IMI rates vary from 0.3% to 0.45% of the home value. If you own a property valued under 125,000鈧�, you may benefit from a three-year exemption (which can be extended for 2 more years) 鈥� but you do have to live in the said property yourself. Also, your household income must not exceed 153,300鈧� in order to be eligible for this exemption.
Note that IMI only applies to property owners, and tenants don't need to pay this tax.
AIMI (Adicional Imposto Municipal Sobre Im贸veis) is an additional property tax that was introduced in 2017. AIMI applies to homeowners whose property is valued (VPT) at 600,000鈧� or above. These are the current tax brackets for the AIMI:
- Property with a VPT between 600.000鈧� and 1.000.000鈧�: 0,7%
- Property with a VPT between 1.000.000鈧� and 2.000.000鈧�: 1,00%
- Property with a VPT over 2.000.000鈧�: 1,50%
We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.
