Closing Cost Provision

What Is It?

The Closing Cost Provision (Provisão para Despesas de Aquisição) is the total amount of money you must have set aside — in addition to the property down payment — to cover all taxes, fees, and administrative costs associated with purchasing a property.

In practical terms, it corresponds to the transaction’s closing costs.

What Is It For / Why Is It Important?

Realistic Financial Planning
Prevents situations where buyers reach the final deed (Escritura) without sufficient funds to pay mandatory taxes — without which the transaction cannot be completed.

Self-Funding Requirement
Portuguese banks do not finance these costs. They must be paid entirely from your own savings.

Expense Forecasting
Allows you to know exactly how much cash must be available in your bank account on completion day.

What Does the Provision Include?

Typically, buyers should account for:

• IMT — Imposto Municipal sobre as Transmissões Onerosas de Imóveis
  (Property Transfer Tax — usually the largest cost, calculated based on the property value)

• Stamp Duty — Imposto do Selo (IS)

  • 0.8% of the property purchase price

  • plus 0.6% of the mortgage loan amount (if financing is used)

• Deed Costs — Escritura
  Notary or Casa Pronta service fees (typically €400–€800)

• Bank Fees (Comissões Bancárias)
  Mortgage setup, valuation, and file analysis fees (usually €500–€1,000)

• Registration Costs (Registos)
  Property acquisition registration and mortgage registration at the Land Registry — Conservatória do Registo Predial

What Is the Typical Amount?

A practical rule is to reserve between 4% and 6% of the property purchase price for these expenses.

Example:
For a €200,000 property, buyers should expect a provision of approximately €8,000 to €12,000, in addition to the down payment (for example, €20,000 for a 10% deposit).

Where and When Are These Costs Paid?

To the Bank
Bank-related fees are paid throughout the mortgage approval process.

To the State / Notary

• IMT and Stamp Duty are paid in the days preceding the Escritura.

• Notary or Casa Pronta costs are paid on the day of completion.

Savings Tip

If you are classified as a Young Buyer (Jovem, up to 35 years old) purchasing your first Primary Residence — Habitação Própria e Permanente (HPP) for a value up to approximately €316,000, you may qualify for IMT and Stamp Duty (acquisition) exemption.

This can reduce required closing funds by several thousand euros.