Portugal Real Estate

Algarve is the best residential property location, located in the southernmost region of Portugal, which also has an important airport, several international schools and top-notch resorts that attract millions of tourists and retirees from northern Europe.

However, residential property remains the most popular property type, mainly due to the versatility of its use, which can include private use as well as short or long term rentals.

In order to conduct your property search: you either do it yourself, starting with an internet search and then contacting the estate agents; or you hire a search agent to do it, the main advantages of which being a deep knowledge of the market and the access to unlisted properties.

You either do it yourself, starting typically with the estate agent who is brokering the sale; or you hire a buying agent to do it for you, the main advantages of which lying in his deep knowledge of the market, ability to anticipate potential problems and a transaction experience that can result in a lower price.

Typically you sign a promissory contract and make a down payment, after which you grant someone (normally your lawyer) a power of attorney for him/her to complete the exchange of final contracts and the property conveyance once the necessary funds have been transferred to Portugal and all the paperwork is in order

There are several real estate agents who provide property management services: managing the refurbishment and/or decoration of your property; finding tenants, negotiating the rental agreements, checking tenants in and out, and collecting deposits and rent; managing property repairs and maintenance; handling utility and service contracts and payments; and handling property tax payments.

Besides legal fees, the following taxes are payable by a property buyer: one-off transfer tax ("IMT") and stamp duty ("IS") on the purchase price or on the tax office valuation of the property, whichever the greater. The rate of stamp duty is 0.8% and that of the transfer tax varies according to the type, the use and the value of the property.

Net rental income earned by a non resident landlord (whether individual or corporate) or by a resident is calculated for tax purposes as gross income less properly documented direct costs. This rental income is taxed at 28% in the hands of a non resident, and, in the hands of the individual resident landlord, it is included in the total taxable income and taxed at progressive rates.

Total tax exemption is granted to the capital gains made on the disposal of a property by an individual, if the property is his/her main residence and the proceeds are used to purchase another main residence in the EU.