Portuguese capital gain taxes: How does it work?

Posted on 10 Nov 2020 in Market
Portuguese capital gain taxes: How does it work?

The capital gain is the difference between the purchase price and the selling price, and when the amount of the result is positive. The tax rate differs whether you are a resident or not. 

To calculate the taxable gain, you take the selling price, minus the acquisition costs, any costs incurred during the transfer of ownership, and also any property improvement costs that have incurred within 5 years of the sale.

Real estate capital gain tax

In the case of residents in Portugal, the capital gains derived from the transfer of property are only taxed on half of the value of the gains and the applicable tax rate depends upon the resident’s aggregate income.

Reduce your amount of capital gain tax by 50% for non-residents

If the money from a sale is re-invested, then only 50% of the capital gains will be subject to the tax.

Real estate capital gains exempted from tax

  • The sale of the main residence if the objective is to re-invest into a new primary residence.
  • You are totally exempted from capital gains tax if you are over 65 years old.
  • If the property in question was first occupied before January 1989 in your name.
  • If you decide to reinvest the monies made from the sale of your Portugal primary residence into another primary residence in the EU, you are then able to roll over the costs.

We cannot advise on tax matters as we are not qualified to. This is just for information. Should you want more information and advice, we would be happy to introduce you to tax specialists and accountants.

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