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I want to sell my property in Portugal | How much tax do I have to pay?

By Mark Quinn - Topics: Portugal, Property, Property Tax, Tax, Tax in Portugal
This article is published on: 11th January 2022

Capital gains tax is charged on the sale of all property in Portugal. Whilst this is less of a problem if you have found your dream home and want to spend many years living there, it is a more significant consideration if your intention is to buy a property for the short term or for investment purposes.

If you purchased the property prior to January 1989 there is no tax on the gain realised on sale. In all other instances, 50% of the gain is taxable and inflation relief can also be applied if the property was held for more than 2 years. The gain is then added to your other income for the year and taxed at the scale rates of income tax.

Despite the potential for high rates of tax on sale, there is main residence relief available if you reinvest the proceeds into another main home in Portugal (or the EU/EEA). Certain other conditions apply but in general, the gain will be exempt from taxation if all the proceeds are reinvested. Any portion not used to purchase another main home (or reinvested in a savings plan/ pension) will be taxed.

Property tax Portugal

In recent years a new relief has been introduced which allows reinvestment into a qualifying long term savings plan or pension. This will be looked at next when we discuss downsizing, as this is a  very useful relief for those wishing to downsize later in life.

These 2 reliefs can be used in conjunction with each other allowing for greater tax planning opportunities.

Please note, Non Habitual Residence (NHR) status does not have an impact on the taxation of Portuguese property. The tax treatment is the same for NHR and normal residents.

If you are non-Portuguese resident, all of the gain is taxable at 28% for individuals.

Article by Mark Quinn

If you are based in Portugal or are thinking of moving to Portugal, you can contact Mark at: mark.quinn@spectrum-ifa.com for more information. If you are based in another area within Europe, please complete the form below and we will put a local adviser in touch with you.

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