Understanding Capital Gains Tax on Property Sales in Portugal (2025)

Published on 15th December, 2025

Calculating Property Capital Gains Tax in Portugal (Flowchart/Example)

Imagine a central flowchart. At the top, it states: "Profit from Property Sale in Portugal: Is it Taxable?" Arrows lead from this to various decision points and calculations, which we will explore as annotations.

Annotation 1: Who Pays Capital Gains Tax?

This section of our visual guide branches based on residency status.

For Tax Residents in Portugal: If you are a fiscal resident in Portugal, 50% of the calculated capital gain is added to your other annual income (like salary or pension) and is then taxed at progressive marginal rates (escalas de IRS). These rates can range from 14.5% up to 48% (plus potential solidarity surcharges for higher incomes) depending on your total taxable income for the year. The remaining 50% of the gain is effectively tax-free for residents under this aggregation method.
For Non-Residents: If you are not a tax resident in Portugal, the rules differ. For non-residents from most countries (including EU/EEA countries that exchange tax information with Portugal), a flat rate of 28% is typically applied to 100% of the taxable gain. However, if the non-resident is from a country considered a tax haven by Portuguese authorities, the rate can be higher (e.g., 35%). It is vital to check the specifics of any Double Taxation Agreement (DTA) between Portugal and your country of residence, as this can influence how gains are taxed and where.

Annotation 2: Calculating the Taxable Gain

Our flowchart now details how the actual gain is determined. The basic formula is:

Taxable Gain = Sale Price – (Acquisition Cost x Inflation Adjustment Coefficient) – Allowable Deductible Expenses

Let’s break this down:

Sale Price: This is the declared selling price of the property as stated in the final deed (Escritura).
Acquisition Cost: This is the original purchase price of the property. If the property has been held for more than 24 months, this acquisition cost is officially revalued using an inflation adjustment coefficient (coeficiente de desvalorização da moeda) published annually by the government. This helps to account for inflation over the ownership period, potentially reducing the taxable gain.
Allowable Deductible Expenses: Certain costs associated with the purchase and sale, as well as significant improvements, can be deducted. These typically include:
- Property Transfer Tax (IMT - Imposto Municipal sobre as Transmissões Onerosas de Imóveis) and Stamp Duty (IS - Imposto do Selo) paid at the time of acquisition.
- Real estate agency commission paid on the sale of the property (if documented with an official invoice).
- Documented costs of capital improvements and major renovations carried out on the property within the 12 years prior to the sale (e.g., new kitchen, extension, new roof – not general maintenance). Invoices must be official and clearly detail the work done.
- Costs associated with the Energy Performance Certificate if incurred for the sale.

Annotation 3: Main Home Rollover Relief (for Residents)

This is a significant relief for Portuguese tax residents. If the property sold was your main habitual residence (your primary home), you might be exempt from CGT if you reinvest the sale proceeds (net of any mortgage repaid on the sold property) into acquiring, building, or renovating another main habitual residence. Key conditions include:

The new property must also be located in Portugal or another EU/EEA country that has a tax information exchange agreement with Portugal.
The reinvestment must occur within a specific timeframe: typically, you can reinvest from 24 months before the sale up to 36 months after the sale of your previous main home.
You must declare your intention to reinvest in your tax return for the year of the sale.
If only part of the proceeds is reinvested, then only a proportional part of the gain will be exempt.

Annotation 4: Exemptions for Retirees/Older Residents (for Residents)

Portuguese tax residents who are retired or aged 65 or over may also benefit from an exemption on CGT from the sale of their main home, provided the sale proceeds (or part thereof) are reinvested within six months into:

An eligible insurance contract.
A qualifying pension fund.
Capital contributions to certain public capitalisation regimes.

This provides an alternative to reinvesting in another property for older residents looking to downsize or move into different living arrangements.

Annotation 5: Reporting and Paying the Tax

Capital gains from property sales must be declared in your annual Portuguese income tax return (Declaração de IRS – Modelo 3). The specific form for declaring property gains and losses is Anexo G (for most standard property sales) or Anexo G1 (for sales of shares in property-holding companies).
The deadline for filing the annual tax return is usually between April 1st and June 30th of the year following the sale. Any tax due is then assessed and payable later in the year.

Annotation 6: Importance of Professional Advice

Tax laws and regulations, including coefficients and specific conditions for reliefs, can change. The information provided here is a general guide for 2025. It is absolutely essential to seek professional advice from a qualified Portuguese accountant or tax advisor before selling your property. They can provide personalised calculations, ensure you benefit from all applicable reliefs and exemptions, and help you comply with all reporting obligations. PortugalProperty.com maintains a network of trusted legal and financial professionals and would be pleased to make an introduction to help you navigate these complexities.

Planning on selling your Portuguese property? Don’t leave tax implications to chance. Contact www.PortugalProperty.com today, and we can connect you with experienced tax advisors to ensure you are fully informed and compliant. Understanding your potential Capital Gains Tax liability is a key step in a successful property sale.

Published in: Miscellaneous