The Complete Guide to Selling Houses in Portugal

The Algarve remains one of Portugal's most desirable regions for both lifestyle and investment. With its stunning coastline, warm climate and vibrant culture, it’s no surprise that buyers are drawn to this part of the country. If you’re planning to sell, understanding the market and positioning your home effectively is essential. Here is our quick guide to successfully selling houses in Portugal as we move into 2025.

Why Sell Your Home in the Algarve?

The Algarve’s real estate market continues to attract interest from international buyers, driven by several factors:

1. International Appeal: Homebuyers from Northern Europe, the UK and North America are drawn to the Algarve for its relaxed lifestyle, affordability compared to other European destinations and rich cultural experiences.
2. Tax Incentives: Portugal’s Non-Habitual Resident (NHR) scheme, recently updated, offers tax benefits that are particularly attractive to retirees and digital nomads, making the Algarve even more appealing to foreign buyers.
3. Investment Potential: With a booming tourism sector, rental properties in the Algarve are in high demand, making it an attractive option for investors seeking strong returns.

How to Prepare Your Property for Sale

Selling a property in the Algarve can be a seamless process if you approach it strategically. Here are the essential steps to ensure a successful sale:

1. Understand Market Conditions

The Algarve market is competitive, with demand consistently outstripping supply. Properties with sea views or located in popular areas like Tavira, Vilamoura, Lagos and Loulé are particularly sought after. Pricing your home realistically is crucial; overpricing can lead to longer market times and missed opportunities.

2. Get Your Paperwork in Order

Having all the necessary documentation in place is a must. This includes the Certidão de Teor (property registration certificate) and an updated Energy Performance Certificate. If you have made renovations, ensure that all zoning and planning regulations are up-to-date and documented.

3. Enhance Your Home’s Appeal

In today’s market, homes that are energy-efficient or feature sustainable materials tend to stand out. Consider making small updates like painting or updating fixtures. If possible, stage the home professionally to help buyers envision themselves living there.

4. Work with a Local Expert

A professional real estate agent located in the Algarve within the specific area you are planning to buy in, can be invaluable. With historical knowledge of the property market and local experience, they can help with everything from realistic pricing and marketing to legal requirements and paperwork.

Marketing Your Home

Marketing is key to selling quickly and at the best price. Here is how to effectively showcase your property:

1. Showcase the Algarve Lifestyle

Buyers are looking for a lifestyle as well as a home. Highlight the proximity to beaches, golf courses and amenities like healthcare facilities. These features are especially attractive to retirees and expats.

2. Digital Marketing

Spend time looking at various real estate company websites within your area. Utilize an agency who offers professional photography, virtual tours and drone footage to capture your home’s best features. In today’s digital-first world, potential buyers are always going to favour homes offered by agencies which have these offerings.

3. Promote Rental Potential

If your property has a history of successful rentals or potential for holiday let income, be sure to highlight this in your marketing materials. The Algarve remains a prime location for short term rentals, especially in high demand tourist areas.

4. Target Niche Buyers

There is a growing trend towards eco-conscious buyers. If your property has sustainable features or energy saving upgrades, make sure to emphasise them.

Financial and Tax Considerations

Selling a home in Portugal comes with its own set of costs and taxes. Here’s a very brief summary of what you need to know:

1. Capital Gains Tax

Until 2022, non-residents selling real estate in Portugal faced a tax rate of 28% on the full capital gain (with a few exceptions for those living in EU Member States) who could opt for Portugal's progressive tax rates (ranging from 14.5% to 53%). Residents, on the other hand, were only taxed on 50% of their capital gains. To ensure fairer taxation, a new directive was issued on April 14, 2023, as follows:

Until December 31, 2022: Non-residents paid tax on only 50% of their real estate capital gains, taxed at the flat rate of 28%.

From January 1, 2023: Non-residents now need to include their capital gains (at 50% of their value) along with their other income for the year, and these gains are taxed according to Portugal’s progressive tax rates, which can reach up to 53%.

So, from January 2023, non-residents selling property must consider their capital gains as part of their total income for the year, which will determine the applicable tax rate. It's also important to note that when determining the tax rate, all income (including foreign income) is factored in, but foreign income itself is not taxed in Portugal.

Important note ….. rules, laws and regulations change frequently in Portugal and whilst we have given you a general overview of the CGT, we would urge all buyers and sellers of property to seek professional advice from the appropriate authorities.

2. Real Estate Agent Fees

Agent fees in the Algarve typically range from 4% to 6% of the sale price plus VAT (23%).

3. Other Costs

Additional costs will include property transfer tax (IMT), notary fees, stamp duty and registration updates

Potential Market Challenges

While the Algarve’s real estate market remains strong, sellers should be aware of a few potential challenges:

• Rising Interest Rates: Increased interest rates could affect local buyers' ability to secure financing, potentially reducing demand.
• Golden Visa Changes: Recent changes to the Golden Visa program have shifted demand toward more affordable properties and urban rehabilitation projects. Coastal properties, particularly luxury ones, could feel the impact.
• Climate Awareness: As environmental concerns grow, properties at risk from climate change, such as those near the coast, may face reduced appeal, especially if buyers are looking for long-term investments.

Summary

While December is often a quieter month for the Algarve real estate market, it offers an excellent opportunity to prepare for the upcoming new year. By taking the time now to set your property up for success, through pricing, legal preparation and marketing, you will be in a prime position to attract buyers when the market starts up again.

If you're considering selling in the Algarve, our experienced team are here to help.