Buying Portugal Property as a Pensioner: What You Need to Know

All the benefits of owning property as a pensioners; mild climate, attractive beaches, and excellent standard of living. Learn everything you need to know
May 31, 2023
Ana Fankhauser
May 31, 2023

Pensioners who own property in Portugal can benefit from the country's mild climate, attractive beaches, and excellent standard of living. To ensure that the process runs smoothly and that you discover a property that suits your needs, it is essential to conduct extensive research and plan in advance. In this post, we will present a comprehensive guide to help you through the process of purchasing a house in Portugal as a senior citizen.

Before making a purchase, you must conduct extensive research on the local real estate market. This will give you a sense of current pricing and availability, allowing you to assess if now is a good time to purchase. Consider the following variables while performing a market evaluation:

Consider the property's location, particularly its closeness to schools, hospitals, and shopping areas, as well as the safety and appeal of the surrounding neighborhood.

Determine the sort of property in which you are interested, such as a single-family home, an apartment, or a holiday rental.

Price range

Determine your budget and study the average prices for the various types of properties in the area.

Real estate websites and brokers, as well as local newspapers and magazines, are available to assist you in conducting market research. It is also a good idea to spend time in the local neighborhood to get a feel for the community and to see the types of properties available.

Obtain a mortgage: It may be difficult for a retiree to purchase a home in cash. You may need a mortgage in this situation. There are a few choices available to retirees in Portugal, including mortgages designed for individuals over 65. It is essential to note, however, that these mortgages may have tougher eligibility restrictions and may require a greater down payment.

To qualify for a mortgage in Portugal, you must normally meet the following criteria:

  • Minimum age required: 18; 
  • Possess a solid credit rating.
  • Maintain a steady income. 
  • Have no prior convictions

The following documents are required for a mortgage application:

  • Pension statements and retirement account statements serve as evidence of income.
  • Identification documents, such as a passport or driver's license, a utility bill, or a rental agreement, are evidence of residence.
  • A duplicate of your credit report

To discover the best bargain, it is advisable to browse and compare offers from other banks. Be sure to check the mortgage's details, including the interest rate, fees, and repayment plan, with care.

Employ a lawyer

It is usually a good idea to hire a lawyer when purchasing property, and this is especially true if you are a foreign retiree purchasing property in a new nation. A lawyer can assist in ensuring the transaction proceeds smoothly and that your rights are safeguarded. A lawyer can help with the following specific tasks:

  • ‍Examining the property's title to ensure there are no defects or encumbrances, starting with the seller's terms,
  • Creating the sales agreement
  • Facilitating the transfer of the property's title
  • As a Portuguese property owner, we will advise you on your legal rights and responsibilities.
  • When selecting a lawyer, it is essential to select someone who has knowledge of real estate law and a solid reputation. You can locate attorneys through referrals from friends and coworkers, online directories, and professional organizations.

Consider your tax requirements

As a Portuguese pensioner, you must pay taxes on all of your income, including rental income from your property. Before making a purchase, it is essential to understand your tax obligations so that you can budget appropriately. Consider the following particular taxes:

Tax on property:

This is a tax on the ownership of property based on the value of the property. Generally, the tax is paid annually, and the rate varies based on the location and value of the property.

You are required to pay income tax on rental revenue if you rent out your property. The tax rate varies based on the taxpayer's income and the type of property owned.

Capital gains tax:

If you sell the property in the future, you may be required to pay capital gains tax on the sale's earnings.

As a property owner in Portugal, it is advisable to contact a tax expert or an attorney regarding your tax responsibilities.

Before making a purchase, it's a good idea to spend some time in the neighborhood to get a sense of the community and confirm that it's a place you'd be delighted to call home for an extended period of time. This might also be an excellent time to meet potential neighbors and learn about the neighborhood's attractions. Consider the following factors when assessing the neighborhood:

Take into account the accessibility of main roads and highways, as well as the availability of public transportation.

Determine the availability of hospitals, physicians, and other medical services in the area.

Investigate local recreational activities such as parks, beaches, and cultural events.

Consider the area's crime rate and other potential threats when researching the area's safety.

By familiarizing yourself with the neighborhood, you can ensure that you select a home in a neighborhood that suits your needs and that you will enjoy living in.

Overall, acquiring a home in Portugal as a retiree can be a lucrative and pleasurable endeavor. You can guarantee that your property acquisition goes well and that you locate a home you love by conducting research, obtaining a mortgage with the help of a mortgage broker, engaging a lawyer, and familiarizing yourself with the neighborhood. As a property owner, you can take advantage of everything Portugal has to offer if you plan and prepare well. Try our free mortgage broker today.

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Ana Fankhauser

Ana has worked in many startups and moved to a few countries, which led her to create MovingTo. She believes that remote work is a growing trend that is here to stay and that digital nomads will move to countries that have more to offer than the ones you were born into. She mostly writes opinion pieces for MovingTo.

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