Real estate investor's glossary: 15 terms you need to know before buying in Portugal

Entering the world of real estate investment can be challenging, especially when faced with specific and sometimes complex terminology. This glossary brings together 15 essential terms that all investors should know before buying a property in Portugal, making it easier to understand and make informed decisions.

1. IMT (Imposto Municipal sobre Transmissões Onerosas de Imóveis)

Tax paid when buying a property, calculated on the basis of the acquisition value or the taxable value, whichever is higher.

2. IMI (Imposto Municipal sobre Imóveis)

Annual tax paid by property owners, calculated on the basis of the property's taxable value.

3. Escritura Pública

Legal document formalizing the transfer of ownership of a property, signed before a notary.

4. Caderneta Predial

Document issued by the tax office containing tax information on the property, such as its location, area and value.

5. Certidão Permanente

Document proving the legal status of the property, including information on ownership, mortgages or liens.

6. Taxable Patrimonial Value (VPT)

The value assigned to a property by the tax authorities, used to calculate taxes such as IMI and IMT.

7. Promissory Contract of Purchase and Sale (CPCV)

Preliminary agreement between buyer and seller, which establishes the conditions of the future purchase and sale of the property.

8. Mortgage

A real guarantee placed on a property to ensure payment of a debt, usually associated with bank loans.

9. Real estate appraisal

The process of determining the market value of a property, carried out by expert appraisers.

10. Use License

Document issued by the City Council certifying that the property meets the legal requirements for its intended use.

11. Condominium

Legal regime applicable to buildings divided into autonomous fractions, with common parts managed collectively by the condominium owners.

12. Capital gain

Profit obtained on the sale of a property at a higher value than its acquisition, subject to taxation.

13. Spread

Profit margin applied by banks to the reference rate on mortgage contracts.

14. Effort rate

Percentage of the household's monthly income used to pay off the mortgage.

15. Usufruct

The right to use and enjoy a property belonging to someone else, without altering its substance.

Conclusion

Understanding real estate terminology is essential for any investor wishing to operate in the Portuguese market. This glossary provides a basis for navigating the various stages of the investment process with confidence.

At IR Group, we are committed to providing you with all the tools and information you need for a successful real estate investment in Portugal. Contact us for personalized advice and to discover the best opportunities in the market.