Capital gains tax on property in Portugal
2 min read · Updated in
In short
When you sell a Portuguese property, 50% of the gain is added to your income and taxed at progressive rates. This is the same for residents and non-resident individuals: the old 28% flat rate for non-residents no longer exists.
Non-resident companies are taxed on 100% of the gain.
How is the gain computed?
Sale price, less the purchase price indexed for inflation, less invoiced works from the last twelve years, less the costs of buying and of selling.
The inflation index only applies if you held the property more than 24 months. Below that, the gain is measured against the nominal purchase price.
What counts as a deductible cost?
On the purchase: transfer tax, stamp duty, the deed, registration. On the sale: agency commission and the energy certificate. In between: works that added value, with an invoice bearing your Portuguese tax number. Without that invoice they do not exist for this calculation.
Is there any relief?
Yes, if you reinvest. Selling your main home and putting the proceeds into another main home excludes the gain in proportion to what you reinvest, within a window from 24 months before the sale to 36 months after.
The intention to reinvest has to be declared in the return for the year of the sale. Failing to declare it forfeits the relief even if you do reinvest. This is the most common and most expensive mistake.
Does a non-resident have to file in Portugal?
Yes. Selling Portuguese property creates a Portuguese filing obligation, whether or not you have any other income here, and whether or not there is tax to pay.
What about a property I inherited?
The acquisition value is the tax value used for stamp duty purposes at the time of the inheritance, or what it would have been had an exemption applied. Because that is usually well below market value, gains on inherited property tend to be large.
Worked example
Sold for €300,000, bought for €200,000 five years earlier
- Sale price
- €300,000
- Purchase price × inflation index (1.10)
- €220,000
- Invoiced works
- €15,000
- Buying and selling costs
- €20,000
- Gain
- €45,000
- Added to income (50%)
- €22,500
Source and date
- Articles 10, 43 to 45, 50 and 68 of the Portuguese income tax code
Updated in . This page describes the rule in force and is not a substitute for tax or legal advice on a specific case.
Frequently asked questions
50% of the gain is added to your income and taxed at progressive rates, for residents and non-resident individuals alike.
Not any more. That flat rate was repealed; non-resident individuals are taxed like residents.
By reinvesting the proceeds in another main home within 24 months before to 36 months after the sale, and declaring the intention in that year's return.