Author, Mike Smith

Last Updated on August 26th, 2024

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Selling your property in Portugal is a significant decision that warrants careful consideration!

As you negotiate the sales process, it’s vital to remember that taxes and other fees are, unfortunately, part of the deal.

In this article, we will cover the costs of selling your property in Portugal in detail, with some top tips on how to keep your expenses to a minimum.

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Costs Overview of Selling a Property in Portugal

Let’s look at what outgoings you can expect to pay from your sale proceeds.

These include estate agent commissions, lawyers fees, and the above-mentioned taxes.

This table gives you an overall summary of the main costs of selling a property in Portugal.

Below, we will go into more detail about each expense to explain each one precisely.

Estate Agent Commission	Between 3-10% of property sale.
Capital Gains Tax	Variable 25-50% of net profit.
Legal Fees	Approximately 1% of the property’s sale value.
Stamp Duty	0.8% of the property’s purchase price.
Notary Fees	Between 500 and 1,500 Euros.
Property Survey	Between 200 and 1,000 Euros.

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Estate Agent Fees

One important thing to remember is that the real estate market is highly competitive – meaning the agents want your business.

This puts you in a solid position to negotiate a fee!

To get some real-time comparisons, I contacted several agents in different areas of Portugal when researching the costs of selling Portuguese property and the difference in fees for estate agents was surprising!

For example, agents operating in the desirable Algarve region charge fees that can be up to as high as 10%.

Other less well-known regions such as Alentejo, were considerably lower, charging fees between 3-5% on average.

After speaking to several agents on the Portuguese island of Madeira, where property prices are much higher than on the mainland, the fee I was quoted was generally around 5%.

When selling your property in Portugal, the commission percentage is something you need to agree on right at the beginning to avoid any unwelcome surprises at the time of your sale!

I came across a Facebook group where both agents and private sellers can advertise properties for sale, at no cost.

If you’re looking to sell your property privately, this could be a good start for some insights into how it all works!

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Capital Gains Tax on Property in Portugal 

Now, let’s talk about the big one – Capital Gains Tax.

Yes, I know that paying taxes is not a popular topic, but having all the information at hand is essential to ensuring you are not paying too much!

To put it simply, Capital Gains Tax is a tax on the profit from selling a property that you bought at a lower price.

If you’re not a tax resident in Portugal, the CGT has a flat rate of 28%, while non-tax residential companies pay 25%.

These rates apply to just the total profit of your sale, not the wholesale.

If you’re a Portuguese resident, you will only pay taxes on 50% of the total profit from your sale, not all of the profit, like the above rates for non-residents.

To reduce Capital Gains Tax expenses, you can subtract specific items from your property’s sale price:

• Purchase and Sale Costs

You can deduct expenses like IMT, the abbreviation for Imposto Municipal Sobre as Transmissoes Onreosas de Imoveis – also known as a property transfer tax.

The IMT tax is calculated based on the property’s purchase price, and the rate ranges from 1% to 8%, depending on the property’s value. For properties purchased for 92,407 Euros or less, no IMT is charged.

Also, consider the possibility of offsetting land registry, real estate commission, and energy certification costs incurred during the buying and selling.

• Costs Over the Previous 12 Years

Taxpayers can deduct expenses related to the property over the last 12 years, including money spent on renovations or improvements that increased the property’s value.

• Comparison with Registered Deed Price

If the property’s registered public deed price is lower than its rateable value, CGT will be calculated based on the higher value, potentially reducing the tax burden.

You or your representative (lawyer, accountant, etc.) must submit a report to your local Portuguese tax department to calculate the tax owed. This report should include:

1. Selling Price
   
   
2. Original Purchase Price
   
   
3. Deductible Expenses
   
   
4. Property Enhancements from the previous 12 years

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Legal Fees for Property Sales in Portugal

Now, about those legal fees.

A Portuguese lawyer will make sure your paperwork is spot-on, and they’ll charge around 1% of the sale price. It’s a worthwhile investment to ensure a smooth process.

While selling, most of the work falls on the buyer’s lawyer, but having your own is essential.

Only some people are advised of this at the time of the sale, and it will be a massive headache if you need to transfer your funds back to the UK.

Robert Garner, one of our traders at Key Currency explains the reasoning behind this:

“We recommend clients send funds to their Portuguese solicitor without amount restrictions. We can then efficiently transfer the funds back to the UK or monitor the market on behalf of our clients. Selling property in Portugal often involves challenges, like low daily transfer limits imposed by banks, which are usually around 10,000 Euros per day. You’ll also face a lack of online options with Portuguese banks, making accessing your sale proceeds difficult when you’re not in the country.”

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What other costs do you need to consider when selling property in Portugal?

Inheritance Tax 

If you’re selling due to a family death, there is no inheritance tax for direct heirs in Portugal.

Inheritance tax in Portugal applies at a flat rate of 10%. The tax only applies to Portuguese assets, rather than assets held in other countries. Legitimate heirs are exempt from paying the inheritance tax in Portugal. These heirs include a spouse, children, grandchildren, parents, and grandparents.

Stamp Duty (imposto do selo)

Stamp duty is a tax charged on various legal and financial transactions in Portugal, including the purchase of property.

The stamp duty is 0.8% of the property’s purchase price.

Notary and Registration Fees

Notary and registration fees are charged for the legal property ownership transfer.

The fees are calculated based on the property’s purchase price and can range from 500 Euros to 1,500.

Property Survey

While not mandatory, every estate agent I spoke to in Portugal highly recommended having a property survey done to identify any potential issues with the property.

The cost of a property survey can range from €200 to €1,000.

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How do I send my funds from my property sale in Portugal back to the UK? 

When sending money from Portugal to the UK, you’ve got two clear options: banks or currency brokers.

The big Portuguese banks typically charge a transfer fee – in the region of 20 to 30 Euros per transfer, every time you send money back to the UK. Most banks also charge a receiving fee. So customers will be charged twice for one transfer. Portuguese banks’ exchange rate margin is around 3.5-5%.

This margin is a lot, especially for big international money transfers.

I asked Millennium BCP, one of the most popular banks with British expats in Portugal, to give me a quote on a transfer. Their exchange rate fee/margin is a whopping 5%.

If you were to use them for a transfer of 500,000 euro property sale, you’d be handing over 25,000 Euros straight to their pockets! Ouch.

Plus, as we have mentioned, most banks in Portugal set daily limits, meaning you would have to pay multiple fees for every transfer you made back to the UK.

To avoid these bank charges, speak to a professional currency broker.

They’re specialists and can save you a substantial amount of money on your transfer.

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How can a Currency Broker help reduce costs when selling a property in Portugal?

The rates offered by a currency broker are typically far more competitive than a Portuguese bank.

Why? – A currency broker has far lower overheads and can pass these savings on to their customers.

When selling a property in Portugal, you’ve got a window of time to get the best Euros to Pounds exchange rate.

A currency broker can be your ally, keeping an eye on rates and alerting you when it’s in your favour or hits a specific level.

Even small moves in the exchange rate matter for large international money transfers. a 1% improvement on a 100,000 Euro transfer means an extra 1,000 euros in your pocket.

Using a specialist, like Key Currency, can give you a hassle-free money transfer back to the UK after your Portuguese property sale.

Leon, one of our traders:

“Making sure you have a currency broker set up for transfers from a Portuguese lawyer expedites the whole process and ensures you can get a competitive rate.

It’s worth noting that if you don’t have a Portuguese bank account, you won’t be able to bank a cheque for the funds of your sale, and neither will a broker.”

Beyond covering the costs, managing money transfers is crucial.

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Money Transfer for Property Sale Proceeds

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