Capital gains tax in Portugal when you sell a home: the 2026 guide
The tax arrives a year after the escritura, the signing of the deed. That is when most people think about it for the first time.
Capital gains tax in Portugal is the part of selling a home that nobody mentions at the viewing, and the one that weighs most on the final figures. The good news is that it can be planned: with the right expenses, the right deadlines and, in many cases, zero tax. This is the Wiseguys Properties guide to capital gains on property in Portugal in 2026, with the rules in force and this year’s changes.
What, exactly, a capital gain is
It is the profit you make when you sell a property for more than it cost you. But it is not simply the difference between the purchase price and the sale price. The tax authority, known as the Finanças, does the sum like this:
Sale price − (acquisition value × devaluation coefficient) − expenses and charges = capital gain.
The currency devaluation coefficient updates the purchase price for inflation. It is published every year by ministerial order (portaria) and only applies to properties held for more than 24 months. The older the purchase, the higher the coefficient and the smaller the taxable gain.
How much capital gains tax you pay in Portugal in 2026
For those resident in Portugal for tax purposes, only 50% of the gain is taxed. That half is added to the year’s other income and pays IRS, Portuguese personal income tax, at progressive rates that reach 48% in the top bracket. In practice, the effective tax on the total gain falls between roughly 6% and 24%, depending on the seller’s income.
Non-residents have, since 1 January 2023, been under the same regime: 50% of the gain is taxed at the progressive rates, determined by taking worldwide income into account. The former flat rate of 28% no longer applies.
Properties bought before 1989 are excluded from taxation. The sale must, even so, be declared.
The expenses that reduce the tax
This is where the most money is won or lost, almost always for want of paperwork. Keep everything from the day you buy.
On purchase: IMT (property transfer tax), stamp duty, the escritura, registrations and the estate agency commission, if you paid it.
On sale: the estate agency commission, the energy certificate and other costs necessary to the sale.
Improvement works carried out in the last 12 years, with invoices issued under the owner’s NIF (Portuguese tax number). Renovations, extensions and structural replacements count; painting and routine maintenance do not.
How not to pay capital gains tax, within the law
1. Reinvest in your main permanent home
If the house you are selling is your habitação própria e permanente, your main permanent home, the gain is exempt to the extent that you reinvest the sale price in buying, building or extending another main permanent home, in Portugal, the European Union or the European Economic Area. The reinvestment can be made in the 24 months before or the 36 months after the sale. The exemption is proportional: reinvest 80% of the sale price and 80% of the gain is exempt. The intention to reinvest is declared in anexo G.
2. If you are 65 or retired
Since 2023, anyone who sells their main permanent home at 65 or over, or already retired, can reinvest the proceeds in a capitalisation insurance policy, an open pension fund or a PPR (Portuguese retirement savings plan) within six months, and be exempt in proportion to the amount invested. The terms of each product should be confirmed before signing.
3. New in 2026: reinvesting in homes to let
Decree-Law no. 97/2026 of 20 May (Decreto-Lei n.º 97/2026) created an exclusion from taxation for those who sell a home and reinvest the proceeds in buying properties for residential letting at moderate rents. The main rules: reinvestment in the 24 months before or the 36 months after the sale; a monthly rent of up to €2,300; the property must be let for at least 36 months, consecutive or not, within the first five years; and it cannot be sold or given away in that period. The regime applies from 2026 to 2029.
“The tax on a house is decided on the day you buy it and the day you plan to sell it, not on the day of the escritura.”
A worked example
A couple bought a flat in Lisbon in 2016 for €300,000, with €12,000 in IMT, stamp duty and escritura costs. In 2019 they carried out €40,000 of works, with invoices. They are now selling for €520,000 and paying €31,980 in commission, VAT included. With an illustrative coefficient of 1.15, the sum runs as follows:
Updated acquisition value: €300,000 × 1.15 = €345,000
Capital gain: €520,000 − €345,000 − €12,000 − €40,000 − €31,980 = €91,020
Taxable amount (50%): €45,510, added to the couple’s other income
In a high income bracket, the tax could come to around €20,000. If the house is their main permanent home and the couple reinvest the full sale price in another, the tax is zero. Without the invoices for the works, the gain would rise by €40,000.
When and how to declare it
The sale is declared in anexo G (Annex G) of the following year’s IRS return, between 1 April and 30 June, with the property’s details, the purchase and sale prices and dates, the expenses and, where applicable, the intention to reinvest. The tax is paid by 31 August.
Before putting the house on the market, it is worth knowing what it is really worth: see how a property valuation works and the steps and documents needed to sell.
Frequently asked questions
How much capital gains tax do you pay when selling a house in Portugal?
For residents and, since 2023, for non-residents too, only 50% of the gain is added to other income and taxed at the progressive IRS rates. The effective tax depends on the seller’s total income.
How can you avoid capital gains tax when selling your main home in Portugal?
By reinvesting the sale price in buying another main permanent home in Portugal, the European Union or the European Economic Area, in the 24 months before or the 36 months after the sale. The exemption is proportional to the amount reinvested.
Do renovation works count towards capital gains?
Yes, improvement works carried out in the last 12 years, backed by invoices issued under the owner’s NIF. Routine maintenance costs do not count.
Do you pay capital gains tax on a house bought before 1989?
No. Properties acquired before 1 January 1989 are excluded from taxation, but the sale must be declared in anexo G of the IRS return.
When do you declare capital gains from selling a property in Portugal?
In the IRS return for the year after the sale, in anexo G, between 1 April and 30 June. The tax assessed is paid by 31 August.
Further reading: Inheritance Tax in Portugal: Selling an Inherited House.
Thinking of selling and want to understand the tax impact before setting the price? Talk to Wiseguys Properties. We work with accountants and lawyers on every sale. Contact.
Sources: Portuguese Personal Income Tax Code (Código do IRS, articles 10, 43 and 51); Law no. 24-D/2022; Law no. 56/2023; Decree-Law no. 97/2026. General information, updated October 2026, which does not replace advice from a certified accountant. Wiseguys Properties, AMI 23109 · info@wgpadvisors.com
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