Buying Property in Portugal

In recent years Portugal has become a possible destination for many Israelis buying a holiday home, or even a home as part of a relocation. Such a home can be an investment or a second base in Europe. As with any significant purchase abroad, the property, the contract and the procedures are governed by local law, not Israeli law, so what is familiar to us from our past experience of transactions in Israel may not apply. This guide explains, from the Israeli side, what is important to check before you commit and which stages are worth getting to know in advance.

It is important to stress that Portuguese law governs the transaction itself, so it should be reviewed by a local lawyer licensed to practice in Portugal. An Israeli lawyer assists with the Israeli side of the process, coordinates with the local lawyer and prepares your documents, but does not serve as a substitute for local legal advice.

First: a lawyer who acts for you and on your behalf

In transactions abroad it is common for the seller, developer or broker to suggest "a lawyer we work with". That is not wrong in itself, but whoever represents you should act on your behalf alone. It is worth asking in advance:

• Who pays the lawyer, and exactly what the service includes: checks, review of the contract, support at signing and registration. This point is often stronger when buying from a developer who offers the company's lawyer to represent both sides of the transaction.
• Which languages the lawyer works in, and how they will report to you on progress.
• Which additional costs to expect. Get a written, current breakdown before committing.

Checking the property before any payment

Before paying a deposit, turn to the local lawyer to check the property's legal status. Common checks include:

1. Ownership and registration. Whether the seller is the registered owner and whether the land registry entry matches those details. Portugal has both a land registry and a separate tax registry, and it is worth confirming that the two are consistent and matching.
2. Encumbrances and third-party rights. Mortgages, attachments or rights of others registered against the property.
3. Use permit and building approvals. Whether the property has a use permit that fits its designation (residential, tourist use and so on), and whether what was built matches the permit.
4. Debts. Local tax debts, building management fees and ongoing bills, including a request for proof of payment.
5. Condition of the building and owners' decisions. In shared buildings, find out whether residents' committee or general meeting decisions on renovations or shared expenses have been taken that will fall on the buyer.
6. Restrictions on use. If you plan to rent the property short-term, ask the local lawyer in advance whether this is allowed for that property, whether a suitable licence exists, and in that area.

The aim is not to create pressure, but to make sure you know what you are buying before entering into a commitment.

Existing property or off-plan

Buying in a project that is still under construction should be treated like buying from a developer, with questions similar to those asked in Israel:

• Who owns the land, and whether it is pledged to the bank financing the project.
• What happens to the money you paid if the project is delayed or stops, and what security exists. How is the buyers' money secured.
• When delivery is expected, whether the contract provides compensation or a mechanism for delay, and what the binding specification is.
• When the building permit will be issued and who is responsible for completing registration in the buyer's name.

An existing property lets you see and inspect what you are buying, but it does not replace preliminary checks, including registration status, encumbrances and permits.

The usual stages of the transaction

The exact structure varies by transaction, but the process generally looks like this:

• Preliminary checks by a local lawyer, before any financial commitment.
• Preliminary agreement. In Portugal it is common to sign a binding preliminary agreement, on signing which a deposit is paid. In the body of this agreement it is important to understand in advance what happens if either side withdraws, and what the conditions precedent are, such as mortgage approval or completion of checks.
• Signing the deed and transferring ownership. The transfer is carried out in a formal procedure in which taxes are paid and the rights are registered. The local lawyer will explain the exact deadlines and requirements.
• Tax identification number. Foreign buyers are usually required to obtain a Portuguese tax number before the transaction. The local lawyer will explain how this is done and who can represent you in the process.
• Taxes and charges. Rates and costs change over time and depend on the type of property and your circumstances. Do not rely on general tables online or on what the seller says. Get a written, current breakdown from the local lawyer or the competent local authority.

Notarial power of attorney and apostille

If you cannot travel to Portugal to sign, you can appoint a representative to sign on your behalf. The usual route is a notarial power of attorney, and from the Israeli side the process generally looks like this:

1. The local lawyer approves the wording and the powers required.
2. You sign in Israel before a notary, who verifies your identity and signature.
3. The document receives an apostille, a certification that allows an Israeli public document to be used in a country that is party to the Hague Convention. Israel and Portugal are both parties.
4. A certified translation of the document is sometimes required.

Define in the power of attorney exactly what the representative may do, for which property and to what extent, and set an expiry date. An over-broad power of attorney is an unnecessary risk. More about the field on the International Law page.

The Israeli side: reporting and tax

Buying property abroad is not only a local matter. As Israeli residents you may have obligations in Israel, such as reporting assets and income from abroad, depending on Israeli law and your circumstances. Rental income, or a gain on a future sale, may be taxable in both countries, with mechanisms to prevent double taxation. Do not assume it will all sort itself out. Consult an accountant or tax adviser who knows both systems before the purchase, not after.

Financing and moving the money

In large transactions both Israeli and foreign banks ask for explanations of the source of funds. Keep documentation of the source of the capital and of each transfer. If you are considering a local mortgage, ask in advance whether the bank lends to non-residents and on what terms.

Property as part of a residency or immigration plan (Golden Visa)

Sometimes buying property is considered as part of residence or status plans in Portugal. The rules on this are set by the Portuguese authorities and change over time, so do not assume that buying property gives you any status. Such questions should be checked in advance with a local immigration lawyer, against the current official rules only.

Inheritance and planning ahead

Property in Portugal is also an asset for inheritance purposes. Proceedings may be needed in both countries, and both Portuguese and Israeli law should be considered together. It is worth planning this at the time of purchase. The Israeli background appears in the article How to Write a Will in Israel, and for property abroad it is advisable to consult a local lawyer as well regarding the property arrangements for the acquired property.

Common mistakes when entering a transaction

• Paying a deposit before the property is checked.
• Relying on a lawyer or broker who acts for the seller.
• Signing a preliminary agreement without understanding what happens if the deal does not complete.
• Signing an over-broad power of attorney.
• Ignoring the Israeli side: reporting, tax and estate planning.

In summary

A purchase in Portugal is handled in an orderly way with the right checks, a local lawyer acting for the buyer, and well-prepared documents in Israel. If you are considering such a purchase, you are welcome to contact us for support on the Israeli side of the transaction, including a notarial power of attorney, apostille and coordination with a local lawyer.

The information in this article is general, is not legal advice, and does not replace a review of Portuguese law with a lawyer in that country.