In March of 2021, my husband purchased and moved into a home near Ericeira in Portugal. This post will cover the costs associated with buying a host in Portugal, including everything from mortgage fees to property transfer tax.
If you’re looking for more details about how to purchase property in Portugal, you’ll want to check out this post.
As always, this is a recounting of my personal experience. I’m not an accountant (though I am married to one) or a real estate professional, so this should not be interpreted as personal financial advice.
How Much Does it Cost to Buy a Property in Portugal?
There are many costs and fees you must pay to close on a property in Portugal. These certainly add up, so it’s important to budget for these from the beginning, in addition to your down payment.
Some of the following costs are one-off, and some are based on a percentage of the purchase price or your mortgage, so these will vary based on the scenario.
You can use our mortgage and purchase costs calculator here to model your situation.
We bought a single-family home with a 20% down payment and a 30-year mortgage. Our costs, not including our down payment, came to 6% of the purchase price of our property.
What Fees Can I Expect?
Here is the list of fees you can expect to pay when purchasing a property in Portugal.
Purchase Costs:
- Property Transfer Tax (IMT): this tax is graduated based on the purchase price of your property, and is charged at between 0% – 8%). See the calculation guide below.
- Stamp Duty (IMI): fixed at 0.8% of the purchase price
- Registration expenses of around €450
- Notary expenses of around €350
- Lawyer fees, variable. Ours were around €850, while I’ve heard others advise up to 1.5% of the property price.
- Certified bank cheque, if applicable. Around €30.
Mortgage Costs:
- IMI (Stamp Duty): fixed at 0.6% of your mortgage
- One-time fees for opening and preparing your mortgage, plus solicitor and appraisal services. These are called by many names by different banks and the amounts vary. Estimate €1,150 – €1,800.
- Property insurance: Your mortgage will likely require you to have life and property insurance. The life insurance is generally wrapped into your monthly mortgage payment. Property insurance is generally paid once annually. Again, this varies. Ours is €270/year.
How Do I Calculate Portuguese IMT?
Property Transfer Tax (IMT) in Portugal is progressive and is based on the purchase price of the property. For residents of Portugal who are purchasing this property as their primary residence, the following taxes apply:
- Purchase price of €0 – €92,407: IMT = 0%
- Purchase price of €92,407 – €126,403: IMT = 2%
- Purchase price of €126,403 – €172,348: IMT = 5%
- Purchase price of €172,348 – €287,213: IMT = 7%
- Purchase price of €287,213 – €574,323: IMT = 8%
- Purchase price of €574,323 and over: IMT = 6%
As an example, if you were to purchase a property for €250,000, you would pay:
- 0% on the first €92,407 = €0
- 2% on tier 2 = (126,403 – 92,407) * 2% = €680
- 5% on tier 3 = (172,348 – 126,403) * 5% = €2,297
- 7% on tier 4, up to your purchase price = (250,000 – 172,348) * 7% = €5,436
- Add all of the above figures together for a total of €8,413 (3.4% of the purchase price).
For more on how to navigate the real estate market in Portugal, the steps involved in purchasing property, and information about working with real estate agents here, check out our How to Buy a House in Portugal post.
Excellent explanation of what to expect (in 2021) in “progressive” RE taxes in PT, this is not only insightful it also helps someone in planning and manage financial expectations.
Thanks! Yes, it’s great to have a picture of what to expect with all of the taxes and fees.
Great post! For the IMT, can you use the loan from the bank to pay for that ? Or do you have to pay out of pocket for that yourself?
Thank you! IMT is paid out of pocket so needs to be included in your budget for initial costs (as far as I know). We put 20% down and after all of our costs were included (down payment, IMT, lawyer, notary fees, etc.) our up-front cash costs were about 26% of the price of the property.
This is very helpful. We just got approved for a mortgage so we will now be approaching making an offer and thankfully have your guide so we know what to expect. Much appreciated. Thank you.
So exciting! Congrats on getting this far and wishing you luck with the next steps!