Portugal Capital Gains Tax

Capital Gains Tax (Tributação de Mais-Valias) applies when selling any Portuguese property that was acquired after 1989.

To calculate the taxable gain, you take the selling price and then deduct the acquisition costs, certain costs incurred during the transfer of ownership and any qualifying property improvement costs that have been incurred within 12 years of the sale, provided valid invoices for the work can be shown.

The net gain will be added to other annual income and taxed at the standard IRS tax rates between 13% and 48%, but only 50% of the gain is taxable and the taxpayer receives inflation relief after two years of ownership.

However, CGT does not apply if a resident of Portugal is selling a primary residence and using the proceeds to buy another residence within Portugal or in another EU or EEA member state. Vendors who are either retired or aged over 65 can also receive an exemption if the gains are reinvested in an eligible life insurance contract or pension fund within six months of the sale.

If the property sold was owned by a foreign company, a 25% capital gains tax is payable. Other capital gains rules apply for properties that have an AL touristic activity.