Buying in Portugal: how much does escritura cost?

When we buy a house, there are many associated costs that are not always clear to us and of which we are not always aware. The most important costs associated with buying a home are those of the deed of purchase in Portugal, known as “escritura”.

This is the final stage in the purchase of a property, the moment when you receive the key to your new home and are considered its legal owner. This process has a cost that should not be overlooked.

What does the deed of purchase in Portugal (escritura) entail?

In layman’s terms, the act of purchase in Portugal (escritura) is a contract between 2 parties that establishes the sale of a property from one party to the other. Both parties, buyer and seller, must be present on the day of the escritura. There is a contract of purchase and sale, which establishes that the buyer becomes the legal owner of the property.

If the buyer has recourse to a loan, a loan contract with mortgage is drawn up in which everything concerning the loan is stipulated (financial plan, interest rate, etc.). It is by concluding this contract that the bank releases the amount needed to pay the seller for the property.

All costs associated with the deed of purchase (escritura) are borne entirely by the buyer of the property.

Where does the deed of purchase take place in Portugal?

The deed of purchase in Portugal (escritura) can be carried out :

• at a notary’s office,
• at certain banks which have a notary’s department,
• through the Casa Pronta service, a series of one-stop shops set up by the Portuguese government to enable citizens to complete all the formalities involved in buying and selling a home.

The documents required to complete the deed of purchase in Portugal (escritura) are as follows:

• Civil and tax identification documents for buyers and sellers,
• Promise to purchase and sale contract, known in Portugal as the “CPCV”
• Energy certificate,
• Technical specifications,
• Caderneta Predial Urbana,
• License of use; TEOR

L’ escritura

Costs associated with buying in Portugal (escritura)

The act of buying a home in Portugal (escritura) is not very costly in itself, but it is linked to a series of taxes that the buyer must pay. The more expensive the house, the higher the costs associated with the act of buying in Portugal (escritura). These include

• Stamp duty on the transaction (imposto do selo) = 0.8%.
• Stamp duty on credit (for credits over €5,000) = 0.6%.
• Payment of IMT = Value of deed or value of wealth tax (whichever is higher) x Rate to be applied – Portion to be deducted (tables below to calculate IMT)*
• Registration of the purchase deed (escritura) Fixed price, between 400 and 700€, and does not depend on the price of the property)

*To calculate IMT, please refer to the two tables below. The first table refers to values for the acquisition of a principal residence (living there for more than 6 months of the year) and the second applies to second homes and rental investments. (Remember to use the free Villa Feria simulator here to calculate everything automatically, and for those who love numbers then use the tables below to calculate the LMI)

Table 1 – Principal residences (valid for mainland Portugal)

Table 2 – Second homes (valid for mainland Portugal)

Let’s look at a concrete example. Mr and Mrs Dupont buy a house as their main residence, to live in for more than 6 months a year. The house costs €500,000. They applied for a loan from the bank, which financed 80% of the purchase. The value of the mortgage is therefore €400,000. Based on these values, Mr and Mrs Dupont will pay on the day of escritura:

• Stamp duty on the transaction (called imposto do selo) 0.8%: 500,000 x 0.008 = €4,000
• Stamp duty on the loan 0.6%: 400,000 x 0.006 = €2,400
• Registration fees : €500
• Tax on the purchase of an asset called IMT (Imposto Municipal sobre a Transmissão Onerosa de Imóveis): (500,000 x 0.08) – 11,959 = €28,040

Therefore, in this case, the total cost to Mr and Mrs Dupont on the day they sign the deed of purchase in Portugal (escritura) is €34,940.

Important note: you’ll need a Portuguese account to buy a house in Portugal. To make payments, you’ll need a Multibanco bank card (Visa, Mastercard or Amex bank cards don’t work) or a home banking reference linked to your Portuguese bank account.

In conclusion

You may already be at an advanced stage of your home search, and it’s only then that the question arises: how much will it cost to buy a house in Portugal? It’s essential to have prior knowledge of all the associated taxes (and without whose payments it’s impossible to make the deed and thus buy your house in Portugal). Make sure you’re properly informed before the “big day”, so as not to be caught unprepared.

To find out what taxes you’ll have to pay once you’ve purchased your property, I invite you to read this other blog post on the subject of taxes in Portugal .

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