Begin with the property price
The property price is the amount paid to the seller for the home.
Taxes and professional fees are paid in addition to that price. They are normally not included in the advertised property price.
Keep these two amounts separate
- Property price
- paid for the home This is the amount paid to the seller.
- Buying costs
- paid in addition to the property price These are the taxes and professional fees needed to complete the purchase.
Property Transfer Tax
Property Transfer Tax is the main tax charged when buying a resale property in Portugal.
The tax is calculated using whichever amount is higher: the agreed property price or the property's official fiscal value. The rate also depends on the price and how the property will be used.
Holiday homes and second properties
- Below approximately €661,000
- progressive tax bands The calculation changes as the property value rises.
- Approximately €661,000 to €1,150,000
- 6% A flat rate applies within this value range.
- Above €1,150,000
- 7.5% This rate applies above the upper threshold.
Purchase stamp duty
Purchase stamp duty is a separate tax charged on the property price. The rate is 0.8% of the property price.
This is purchase stamp duty. It is not the same as the stamp duty charged on a mortgage.
Tax on a new-build property
A property bought directly from a developer may be treated differently from a resale property.
Value Added Tax may be included in the developer's advertised price instead of Property Transfer Tax being charged separately.
Notary and Land Registry fees
The notary completes formal parts of the purchase. The Land Registry records the new owner.
Legal fees
The buyer should appoint an independent Portuguese lawyer. A typical legal fee is 0.5% to 1% of the property price, plus Value Added Tax.
Mortgage costs
This section applies only if the buyer uses a Portuguese mortgage.
Mortgage stamp duty is charged on the amount borrowed, not on the full property price.
Mortgage stamp duty
- Loan lasting five years or more
- normally 0.6% of the amount borrowed This percentage applies to the loan, not the property price.
- Loan lasting less than five years
- normally 0.5% of the amount borrowed This percentage applies to the loan, not the property price.
The lender may also charge valuation, arrangement or administration fees. These vary, so the lender should provide them in writing.
Total buying costs to allow
After the individual costs have been considered, the buyer can set an overall planning allowance.
Initial allowance for taxes and professional fees
- Many resale purchases
- approximately 7% to 9% of the property price This is a planning range, not a quotation.
- Some premium Algarve properties above €1 million
- approximately 9% to 10% of the property price This is a planning range, not a quotation.
A €900,000 Quinta do Lago example
This example assumes the property is a resale villa, the price is €900,000, no mortgage is used, and the official fiscal value is not higher than €900,000.
Mortgage fees, currency costs, surveys and property-specific extra work are excluded.
Three steps
- 1. Property price
- €900,000 The amount paid for the villa. This is not a tax or fee.
- 2. Combined buying-cost allowance
- approximately €65,000 to €80,000 The planning allowance for the main taxes and professional fees. This is not one individual tax.
- 3. Total cash required
- approximately €965,000 to €980,000 The property price plus the buying-cost allowance, assuming no mortgage.
The combined buying-cost allowance includes Property Transfer Tax, €7,200 purchase stamp duty, notary and Land Registry fees, and legal fees.
Smaller extra costs
These costs are secondary to the main purchase taxes and professional fees.
Transaction extras can include a survey, technical inspection, currency transfer and finance-related charges.
Annual ownership costs can include municipal property tax, condominium or resort charges, and insurance.
Running and optional services can include utilities, pool or garden care, property management, rental-compliance costs, and golf or resort charges where relevant.
Independent Portuguese legal help
Golf Homes International can introduce buyers to TOL Legal Team, a Quinta do Lago-based Portuguese law firm advising overseas clients on property purchases in Portugal.
TOL Legal Team acts independently. Any introduction is optional. Buyers remain free to appoint another lawyer, tax adviser or financial adviser.
Frequently asked questions
Are buying costs included in the property price?
Normally not. The property price is paid for the home. Buying costs are the taxes and professional fees paid in addition to it.
What are the main buying costs?
For a resale purchase, the principal costs are Property Transfer Tax, 0.8% purchase stamp duty, notary and Land Registry fees, and legal fees. Mortgage costs apply separately if a Portuguese mortgage is used.
How much should I allow in total?
For many resale purchases, allow approximately 7% to 9% of the property price. For some premium Algarve properties above €1 million, the allowance can reach approximately 9% to 10%. These are planning ranges, not quotations.
What does the €65,000 to €80,000 figure mean?
It is the combined buying-cost allowance in the €900,000 Quinta do Lago example. It is not the property price and it is not one individual tax.
Is mortgage stamp duty included in the example?
No. The €900,000 example assumes no mortgage. Mortgage stamp duty and lender fees would be additional costs.
Does a new-build property use the same tax calculation?
Not necessarily. Value Added Tax may be included in a developer's advertised price instead of Property Transfer Tax being charged separately. The developer and the buyer's lawyer should confirm the treatment in writing.
