How to buy property in Portugal as a foreigner

If you want to buy a holiday house or home in Portugal, the first thing you'll be worried about is any restriction on your right to purchase or own property as a foreigner. You needn't worry - Portugal has no restrictions. You can buy a home wherever in the country you want.

However, you will need to jump through a few hoops as regards paperwork.

  • For instance, you'll need to get a Portuguese tax number (numero de contribuinte or NIF, numero de identificação fiscal) before you can complete the purchase of a property. You'll need to apply to the local tax office or the financial department and you'll have to pay a small fee. You can provide your lawyer's address as a correspondence address if you don't yet have an residence in Portugal.

  • If you are a citizen of a non-EU country, you'll also need to appoint a tax representative in the country. Again your lawyer will probably be first port of call.

  • Portuguese banks have no problem lending to foreigners, though they will only lend 70% of the value of the property to non-residents; that goes up to 80% if you're going to be a Portuguese resident. You could simply apply yourself at a local bank. But again, language might be an issue; you're best using a mortgage broker who will not only be able to speak your language, but will probably be able to secure you a much better deal than you'd be able to get on your own.

Your biggest difficulty buying as a foreigner will probably be the Portuguese language. It's less well known than French or Spanish, for instance, so you may want to use a translator, or to hire a lawyer who speaks both English and Portuguese fluently. You might also want to look for a bilingual property manager if you're planning to let the property out and won't be there most of the time.

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Golden visa scheme – how to get residency in Portugal

The best thing about being a foreigner buying in Portugal, though, is that you can take advantage of two separate schemes set up to attract foreign investment, the 'golden visa' scheme and the Non-Habitual Resident (NHR) tax programme.

The golden visa scheme

Passport and ticketThe golden visa scheme allows non-EU citizens to secure residency by investing EUR 500,000 in property, or EUR 350,000 if they buy property for redevelopment within an urban renewal zone. There are other ways to access the scheme, for instance by starting a business that employs more than ten people, or investing in Portuguese smaller companies, but the property route is the one most often taken. Many purchasers under this scheme have headed to Cascais or Lisbon, but Porto and the Algarve could also be attractive ports of call.

The scheme gives residency for one year, renewable twice for two years. That will take you through to the five-year point at which you're eligible to apply for permanent residency; wait another year and you can apply for naturalisation as a Portuguese citizen, if you want. (Note that Portugal allows dual nationality.)

You can apply on your own if you want, but most applicants use a lawyer or specialist to help them through the application process. Unless you really enjoy doing paperwork, that's probably the best route. So far, the greatest proportion of applicants have come from China, Brazil and South Africa, with a good sprinkling of Russians, but the scheme might also apply to Brits who move to Portugal after Brexit.

The NHR scheme

The NHR scheme is quite separate from the Golden Visa, and gives foreign nationals who are moving to Portugal a ten year tax break. Any income that comes from outside Portugal, and that is taxable by the country from which you receive it, is received free of Portugese tax. So, for instance, if you retire to Portugal, your UK pension and savings income will be free of tax for 10 years. If you decide to work in Portugal, you might also get a break - depending on your profession; singers and musicians, dentists, IT experts, and archaeologists are some of those who benefit from a 20% flat tax on their income under the scheme.

However, if you want to use this scheme, you must not have been a Portuguese tax resident in the last five years. That means you'll need to get your NHR application filed fairly quickly once you move, to avoid getting sucked into the Portuguese tax system.

All in all, buying property in Portugal can be a relatively quick and painless affair for most foreign purchasers - and the extra advantages make it well worth your while if you're looking to move to Portugal permanently.

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