Capital gains tax when selling property in Portugal (residents and non-residents)

Selling a flat in Lisbon or a villa in the Algarve can create a sizeable taxable gain, called mais-valia in Portuguese. The good news is that Portugal taxes only half of the gain, lets you deduct a range of costs, and offers exemptions if you reinvest in a new home. This guide explains how the gain is worked out, how residents and non-residents are taxed in 2026, which exemptions exist and how to declare the sale.

It covers individuals selling property they own personally. Property held through a company, or used in a business or freelance activity, follows different rules.

How the taxable gain is calculated

The gain is the difference between what you sold for and what the property cost you, with a few adjustments set out in the IRS code (Código do IRS, articles 44 to 51):

1. Sale value (valor de realização). Normally the price in the deed. If the property's tax value used for IMT (imposto municipal sobre as transmissões onerosas de imóveis, the property transfer tax) is higher than the price, the tax authority (AT, Autoridade Tributária) uses that higher value unless you prove the real price was lower.
2. Acquisition value. The value on which IMT was assessed when you bought. For inherited or gifted property it is the value used for stamp duty (imposto do selo).
3. Inflation adjustment. If more than 24 months passed between purchase and sale, the acquisition value is multiplied by a monetary devaluation coefficient (coeficiente de desvalorização da moeda). The coefficients are published each year by ministerial order (portaria) for that year's sales, so the figure for a 2026 sale may only be confirmed late in the year.
4. Add the costs you can prove, for example:
   • IMT and stamp duty you paid when buying, plus notary, land registry and legal fees for the purchase
   • improvement works (encargos com a valorização) carried out in the last 12 years, with invoices
   • costs of selling, such as estate agent commission and the energy certificate

In short: gain = sale value − (acquisition value × coefficient) − purchase costs − improvements in the last 12 years − selling costs.

Keep every invoice, ideally issued with your NIF (número de identificação fiscal, your tax number). Builders' quotes, bank transfers without invoices and work done more than 12 years ago generally do not count.

How residents are taxed: half the gain at progressive rates

If you are a Portuguese tax resident (see when you become tax resident), 50% of your net property gain for the year is added to your other income (englobamento, aggregation) and taxed at the normal progressive IRS rates. Gains and losses on property sold in the same year are netted first.

The 2026 rates, set by the 2026 State Budget (Lei 73-A/2025), are:

On top of this, a solidarity surcharge (taxa adicional de solidariedade) of 2.5% applies to taxable income between €80,000 and €250,000 and 5% above €250,000. For a sale made in 2025 (declared in 2026), the 2025 rate table applies, with slightly different brackets.

Because half the gain is added to your salary, pension or business income, a large sale can push you into the top brackets. Timing a sale for the end of one year or the start of the next, or spreading two sales across two tax years, can change the result.

How non-residents are taxed since 2023

Until the end of 2022, non-residents paid a flat 28% on 100% of the gain, which the Court of Justice of the EU had found discriminatory. The State Budget for 2023 (Lei 24-D/2022) changed the rules for sales from 1 January 2023:

• Only 50% of the gain is taxed, as for residents.
• That half is taxed at the progressive IRS rates in the table above, not at a flat rate.
• The rate is determined by taking into account all your income, including income earned outside Portugal, as if you were resident. The resulting rate is applied only to the Portuguese gain. The AT confirmed this reading in its Ofício Circulado 20255/2023.

In practice this means you must declare your worldwide income in the Portuguese return. A non-resident with modest income abroad usually pays less than under the old 28% rule. One with high income abroad may pay close to the top rate on the taxable half.

Non-residents also file a Portuguese IRS return (Modelo 3) for the year of the sale. If you live outside the EU/EEA, check whether you need a tax representative in Portugal or can use the AT's electronic notifications instead. Your country of residence may also tax the gain; double tax treaties usually let Portugal tax property located here, with a credit in your home country.

Exemptions and special cases

Reinvesting in a new main home

The gain on selling your own permanent home (habitação própria e permanente) is excluded from tax if all these conditions are met (article 10 of the IRS code):

• The property sold was your or your household's permanent home, shown by your tax address (domicílio fiscal), in the 12 months before the sale (or before the reinvestment, if that came first).
• You reinvest the sale value minus any mortgage you pay off in buying, building, extending or improving another permanent home in Portugal or another EU/EEA country that exchanges tax information with Portugal.
• The reinvestment happens between 24 months before and 36 months after the sale.
• You state your intention to reinvest, and the amount, in the IRS return for the year of the sale.
• You move into the new home and make it your tax address, generally within 12 months of buying it.

If you reinvest only part of the money, only the matching part of the gain is exempt. If you do not complete the reinvestment, the gain becomes taxable, with compensatory interest. Since 2026 the reinvestment deadline can be suspended if the purchase falls through for reasons outside your control and goes to court.

This exemption is built around a home that was your Portuguese tax address, so it is mainly relevant for residents. If you moved abroad shortly before selling, get advice before relying on it.

Reinvesting in affordable rental housing (2026–2029)

A rule added by Decreto-Lei 97/2026 applies to sales between 1 January 2026 and 31 December 2029. It excludes the gain on selling your main home or other residential property if you reinvest the proceeds, within the same 24-before/36-after window, in Portuguese homes let for housing at rents within the caps set by that decree-law. The property must be let within six months, rented for at least 36 months in the first five years, and not sold within five years. The rent caps and conditions are detailed, so check them with an accountant before you commit.

Reinvesting in a pension product (65+ or retired)

If you or your spouse or partner are 65 or older, or retired, the gain on selling your main home can be excluded if, within six months of the sale, you use the proceeds (minus any mortgage repaid) to buy an eligible product: a life insurance savings contract, individual membership of an open pension fund, contributions to the public capitalisation scheme, or a Pan-European Personal Pension Product (PEPP). Insurance and pension fund products must pay you a regular income for at least 10 years, with annual payments of no more than 7.5% of the amount invested.

Property acquired before 1 January 1989

Gains on property you bought, inherited or received as a gift before 1 January 1989 (when the IRS code took effect) are generally not taxed, under transitional rules. You still report the sale, in Anexo G1. Building land has a different cut-off, and the position can be less clear if a building was later built or substantially rebuilt, so check your case.

Worked example (illustration only)

The numbers below are round figures for illustration. The coefficient of 1.20 is assumed, not the official figure.

A Portuguese resident bought a flat in 2014 and sells it in 2026. It was not their main home.

If their other taxable income is €30,000, the €56,000 is added to it, giving €86,000. Using the 2026 table, the extra IRS on that slice comes to roughly €23,700, about 21% of the full gain, before personal deductions.

A non-resident making the same gain, with €30,000 of income abroad, would have a rate based on €86,000 of worldwide income (an average rate of about 35%) applied only to the €56,000. That comes to roughly €19,500.

If the flat had been the seller's main home and they put the €400,000 into a new main home within the deadlines, the gain would be excluded altogether.

Declaring the sale

1. Gather documents: purchase and sale deeds, IMT and stamp duty receipts, invoices for works and fees, the property's tax register number (artigo matricial), and mortgage statements if you will reinvest.
2. File the IRS return (Modelo 3) for the year of the sale between 1 April and 30 June of the following year. A sale in 2026 goes in the return filed in 2027. See our guide to the IRS return.
3. Complete Anexo G with the sale and purchase dates and values, the expenses and, if relevant, your intention to reinvest and the amount. Use Anexo G1 for sales that are not taxed, such as property acquired before 1989.
4. Report the reinvestment in later returns as you make it, and keep proof of the new home being your tax address.
5. Pay when the AT issues the assessment (nota de liquidação). Nothing is withheld at the deed.

On the other side of the deal, the buyer pays IMT and stamp duty (0.8% of the price) on the purchase, not the seller.

If you also rented the property out, the rent is taxed separately; see our rental income guide.

Common pitfalls for foreigners

• Missing invoices. Works paid in cash or without an invoice in your name usually cannot be deducted.
• Forgetting to state the reinvestment intention in the return for the year of the sale.
• Tax address not updated. The exemption depends on your domicílio fiscal being at the home, both the one you sell and the one you buy.
• Assuming non-residents pay 28%. That rule ended in 2022, and you now need to declare worldwide income.
• Selling in the year you change residence. Partial-year residency can change which rules apply to the gain.
• Ignoring tax in your home country, which may also tax the gain and give a credit for Portuguese tax.

How an accountant can help

For a simple sale with all the paperwork, many people file themselves. A certified accountant (contabilista certificado) is worth it when the gain is large, you plan to rely on a reinvestment exemption, you are a non-resident declaring worldwide income, the property was inherited or co-owned, or you are moving country around the time of the sale. They can check the deductible costs, apply the right coefficient, time the sale and file Anexo G correctly. You can find accountants who specialise in property or in IRS returns on Accountants Hub.