Portugal Property Terms Every American Buyer Should Know

 

 

Portugal Property Terms Every American Buyer Should Know

 

 

Interest from American buyers in Portuguese real estate has skyrocketed in recent years, and the Algarve is right at the heart of it. In fact, recent figures show that U.S. investment in Portuguese property has grown by over 40% in just two years, with Americans now ranking as the second-largest group of non-EU buyers.

If you're an American, or any international buyer drawn to the Algarve’s luxury lifestyle, the process of buying property here can feel unfamiliar at first. Many terms used in Portuguese real estate don’t have direct translations or can carry different meanings than their U.S. counterparts.

To make your property search easier, we’ve created a helpful glossary of commonly used terms in Portugal’s property market, with U.S. equivalents where possible:

 

Portugal to U.S. Property Glossary

1. T1, T2, T3, etc.

- US Equivalent: 1-bed, 2-bed, 3-bed
In Portugal, homes are categorized by the number of bedrooms using a “T” (short for typology). A T2 means the property has two bedrooms, regardless of how many other rooms it contains.

2. Villa

- US Equivalent: Detached single-family home
In Portugal, a “villa” typically refers to a standalone home, often with a garden, pool, and more privacy. It’s a term frequently used in luxury real estate, particularly in the Algarve.

3. Condominium (Condomínio)

In Portugal, this term often refers to whether a property is located within a managed development, or block of apartments, and normally comes with a monthly fee owners pay for shared services and maintenance, not just the apartment itself.

4. IMT (Imposto Municipal sobre Transmissões)

- US Equivalent: Property transfer tax
A one-time tax paid by the buyer when purchasing property. The rate varies depending on value and property type.

5. Stamp Duty (Imposto do Selo)

- US Equivalent: Real estate transfer tax (state/local level)
This is a one-time 0.8% tax paid by the buyer on the purchase price of a property. It is typically paid at the time of the deed signing and applies to most property transactions in Portugal.

6. IMI (Imposto Municipal sobre Imóveis)

- US Equivalent: Annual property tax
This municipal tax is paid yearly and is based on the property’s tax value, which is often lower than market value.

7. Promissory Contract (Contrato de Promessa de Compra e Venda)

- US Equivalent: Purchase & Sale Agreement
A legally binding agreement signed before the deed. A deposit, often between 10% and 30%, is typically required.

8. Escritura

- US Equivalent: Closing / Deed signing
The final signing that officially transfers ownership of the property. Held in front of a notary.

9. Energy Certificate (Certificado Energético)

- US Equivalent: Energy efficiency rating
Mandatory in Portugal for all properties sold or rented. Homes are rated from A+ (most efficient) to G (least efficient).

10. Urban vs. Rustic Land

In Portugal, Urban land = buildable | Rustic land = usually non-developable or agricultural
In the U.S., you might hear "residential" or "agricultural," but Portugal uses these terms with legal and zoning implications.

11. Fractional Ownership

- Not widely used in U.S. real estate.
In some Portuguese resorts, multiple buyers legally co-own a property and have usage rights for specific periods. This is not the same as a timeshare.

12. Alojamento Local (AL License)

- US Equivalent: Short-term rental license (e.g., for Airbnb)
Required to legally rent a property on a short-term basis. Regulations vary by municipality.

We hope this glossary gives you a clearer picture of the buying process here in Portugal. At QP Savills, we’re proud to help international buyers, especially our growing American audience, navigate the Portuguese property market with confidence. Whether you're dreaming of a luxury villa or a beachfront apartment, we’re here to guide you every step of the way!

 

Ready to start your Algarve property journey? Get in touch - we’d love to help!