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Seller Taxation

Selling a property in Portugal involves understanding the country's taxation system, specifically capital gains tax and inheritance tax, which are pivotal aspects for property owners and heirs alike. Please read the guide below.

Taxation in Portugal

Selling a property in Portugal may give rise to a taxable capital gain. This gain is calculated as the difference between the sale price and the acquisition cost, after deducting legally allowable expenses, such as purchase costs, estate agency commissions, and certain qualifying improvement works.

Since 2023, residents and non-residents are subject to broadly similar rules regarding the taxation of capital gains on Portuguese real estate. Only 50% of the capital gain is taken into account for Personal Income Tax (IRS) purposes, and that amount is taxed according to the progressive IRS rates, which can reach up to 48%. Non-residents must also declare their worldwide income for the sole purpose of determining the applicable tax bracket.

The sale of a primary residence may qualify for a full or partial exemption from capital gains tax if the proceeds are reinvested in another qualifying primary residence, provided the legal requirements and time limits are met.

Capital gains

Portugal does not have a traditional inheritance tax. However, gratuitous transfers through inheritance or gifts may be subject to Stamp Duty at a rate of 10%, unless the beneficiary is a spouse, descendant, or ascendant, all of whom benefit from an exemption.

Certain costs may be deducted when calculating the taxable gain, including:

Estate agency commissions;
Property Transfer Tax (IMT) paid on acquisition;
Stamp Duty paid on acquisition;
Notary and Land Registry fees;
Eligible property improvement works supported by appropriate documentation.

Portugal maintains an extensive network of Double Taxation Agreements (DTAs), which can help prevent the same income from being taxed twice in different jurisdictions, depending on the taxpayer's country of residence and the applicable treaty.

Important: Capital gains tax rules are complex and individual circumstances vary. Property owners should seek advice from a qualified tax adviser to ensure compliance with the latest legislation and to identify any available reliefs or exemptions.

Inheritance tax & Gift tax

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