Buying property in the Algarve is one of the most significant decisions most people will ever make, and doing it in a foreign country adds a layer of complexity that is worth understanding before you start. The good news is that the process is well established, foreigners buy here all the time, and once you know what to expect it is genuinely manageable.
What you do need to know going into 2026 is that the tax rules for non-resident buyers changed significantly at the start of this year. If you have been reading articles about buying property in Portugal that were written before 2026, some of the cost information will now be out of date. This guide reflects the current situation.
Can foreigners buy property in the Algarve?
Yes, completely freely. Portugal places no restrictions on foreign property ownership. EU and non-EU citizens alike can buy property here without any special permissions or investment thresholds. The Golden Visa programme used to offer residency in exchange for property investment but the real estate route was closed in October 2023, so buying a property no longer grants you the right to live here. For residency, you need a separate visa such as the D7 visa.
Buying a property does not require you to be a Portuguese resident. Many people own property in the Algarve as a holiday home or investment without living here full time.
Step one: Get your NIF
Before you can do anything in Portugal financially, including signing a property contract, you need a NIF. This is your Portuguese tax identification number. EU citizens can get one directly from a local Finanças office. Non-EU citizens need to appoint a fiscal representative to get one on their behalf.
You can sort your NIF even before you have found a property. In fact, getting it done early removes one potential delay later in the process when you are under time pressure.
Step two: Appoint a property lawyer
This is not optional. In Portugal, buyers are strongly advised to appoint an independent property lawyer before they make any offers or sign anything. Your lawyer is different from the estate agent and represents only your interests.
What your lawyer does for you includes carrying out due diligence on the property (checking title, planning permissions, any debts or charges attached to the property), reviewing and advising on all contracts, handling the funds and tax payments, and registering the property in your name once the purchase completes.
Legal fees typically run 1% of the purchase price plus 23% VAT. On a €400,000 property that works out at around €4,920. It is money well spent. The most common and expensive mistakes in Portuguese property transactions happen when buyers try to manage the process without proper legal representation.
Look for a lawyer who specialises in property transactions for international buyers and who speaks your language. There are several well-regarded firms operating across the Algarve.
Step three: Open a Portuguese bank account
You will need a Portuguese bank account to pay for the property and to handle the various taxes and fees involved. Millennium BCP is the most commonly used bank by expats and has a non-resident account option. Our guide to setting up a bank account in Portugal covers this in detail.
Step four: Find your property and make an offer
The Algarve property market is active and well served by estate agents, both Portuguese and international. Most larger agents have English-speaking staff and are familiar with the needs of foreign buyers.
Offers are usually made verbally first. Once a price is agreed, the process moves to the Promissory Contract (Contrato Promessa de Compra e Venda or CPCV). Do not agree on anything in writing or pay any money before your lawyer has reviewed the situation.
Step five: The Promissory Contract (CPCV)
The CPCV is a legally binding contract between buyer and seller that sets out the agreed price, terms and completion date. At this stage the buyer pays a deposit, typically 10% of the purchase price.
This deposit has legal protection built in. If the buyer pulls out without good reason, the deposit is forfeited. If the seller pulls out, they must pay the buyer back double the deposit. This gives both parties an incentive to proceed and is one of the protections that makes the Portuguese system reasonably fair for buyers.
Your lawyer should carry out full due diligence before you sign the CPCV. This includes checking the land registry (Conservatória do Registo Predial) to confirm ownership and any debts, the tax office records to check for unpaid IMI, and the local council (Câmara Municipal) to confirm planning status and any licences.
Step six: Paying the taxes before completion
Before you can sign the final deed, you need to pay two taxes. This is where 2026 brings an important change that is worth understanding carefully.
IMT (Imposto Municipal sobre Transmissões)
IMT is Portugal’s property transfer tax and it is the biggest cost in the buying process. From 2026, the rules changed substantially for non-resident buyers.
Previously, IMT was calculated on a progressive scale based on property value and whether it was a primary residence or holiday home. From 2026, non-resident buyers pay a flat rate of 7.5% on all residential property purchases, regardless of value.
There are exemptions. If you become a Portuguese tax resident within two years of purchase, you can claim a refund to the lower progressive resident rates. If you commit the property to long-term rental at moderate rents within six months and keep it rented for at least 36 months in the first five years, you can also claim a refund. In both cases you pay the 7.5% upfront and apply for the difference back once the conditions are met.
For buyers who are moving to the Algarve and plan to become tax residents, this is a very relevant point. If you become a resident within two years you will likely get a significant portion of the IMT back. Speak to your lawyer and a tax adviser about how this applies to your specific situation.
To give you an idea of what this means in practice, on a €400,000 property a non-resident buyer pays €30,000 in IMT at the flat 7.5% rate. A resident buying the same property as a primary home would pay considerably less under the progressive scale.
Stamp Duty (Imposto do Selo)
Stamp duty is a flat 0.8% of the purchase price, paid on top of IMT before the final deed is signed. On a €400,000 property that is €3,200. If you are using a mortgage, an additional 0.5% to 0.6% stamp duty applies to the mortgage amount.
Both IMT and stamp duty must be paid before you can complete the purchase. Your lawyer generates the payment references and handles this as part of the conveyancing process.
Step seven: Completion (Escritura)
Once the taxes are paid, the final deed of purchase is signed at a notary. Both buyer and seller (or their legal representatives) attend. The notary reads out the deed, both parties sign, the remaining balance of the purchase price is transferred, and ownership passes to the buyer.
The notary then registers the new ownership at the land registry and tax office. Notary and registration costs typically run €1,000 to €1,200.
What does buying property in the Algarve actually cost?
Here is a realistic cost breakdown for a €400,000 property purchase as a non-resident in 2026:
- IMT at 7.5%: €30,000
- Stamp duty at 0.8%: €3,200
- Legal fees at 1% plus VAT: approximately €4,920
- Notary and registration: approximately €1,200
- Total buying costs: approximately €39,320 on top of the purchase price
That is just under 10% of the purchase price in additional costs. Budget for 9% to 10% as a general rule for non-residents in 2026. Residents buying a primary home will pay less, closer to 5% to 6% depending on the property value.
On top of the one-off buying costs, remember the ongoing annual costs once you own. IMI (the annual municipal property tax) runs 0.3% to 0.45% of the property’s registered tax value per year. For high-value properties above €600,000, an additional wealth tax called AIMI may also apply.
Getting a mortgage in Portugal
Portuguese banks do lend to non-residents, though typically on less generous terms than for residents. Non-residents can usually borrow up to 70% of the property value, while residents can often borrow up to 90%. Interest rates are broadly in line with European rates and both variable (EURIBOR-linked) and fixed rate options are available.
You will need to show proof of income, bank statements, existing financial commitments and details of the property. The mortgage approval process can take several weeks so start it early if you need financing. Some buyers use a mortgage broker who specialises in Portugal to compare lenders and navigate the process.
What about new builds?
Buying a new build in Portugal is slightly different. New builds are subject to VAT at 23% rather than IMT, and this is usually included in the sale price by the developer. The CPCV process works differently for off-plan purchases because completion happens when the building is finished rather than immediately. Make sure your lawyer checks the developer’s credentials and that the contract includes proper protections in case of delays or the developer running into difficulty.
Algarve property prices in 2026
Property prices in the Algarve vary considerably depending on where you are looking. The golden triangle area around Quinta do Lago, Vale do Lobo and Vilamoura sits at the premium end of the market, with villas regularly selling for €1 million and above. The central and eastern Algarve offers better value, with towns like Tavira, Olhão and Loulé having significantly more affordable options. The western Algarve around Lagos and Sagres has seen strong price growth but still represents better value than the golden triangle.
As a broad guide, a two-bedroom apartment in the Algarve starts from around €200,000 to €250,000 in less expensive areas and rises to €400,000 or more in the golden triangle and Vilamoura. A three-bedroom villa with a pool starts from around €400,000 to €500,000 in the central Algarve and significantly more near Quinta do Lago and Vale do Lobo.
Our guide to the best places to live in the Algarve covers the different areas in detail and will help you work out which part of the region suits your lifestyle and budget.
The honest summary
Buying property in the Algarve is a well-trodden process and thousands of international buyers do it successfully every year. The key things to get right are appointing a good independent lawyer before you sign or pay anything, understanding the 2026 IMT changes and how they apply to your situation, and budgeting properly for all the buying costs rather than just the purchase price.
If you are planning to become a Portuguese resident, the IMT refund mechanism for people who establish tax residency within two years is genuinely worth discussing with your lawyer before you buy. The savings can be significant.
If you are still figuring out the residency and tax side of your move, our NHR Portugal tax guide and D7 visa guide are the places to start. And for a realistic picture of what life costs once you are here beyond the property purchase, our cost of living guide has the full breakdown.