Have you sold your house in Portugal or are you planning to do so soon?
Then you need to know how capital gains tax in Portugal in 2025 works. In this article, we explain when you have to pay, the applicable rates, how it works for residents and non-residents, and strategies to reduce or even avoid this tax.
Capital gains are the profit from selling a property – the difference between the purchase price and the selling price.
This gain is taxable in Portugal, but the rules differ depending on whether you are a tax resident or not.
Properties purchased before 1989 are exempt.
For later acquisitions, 50% of the gain is added to your annual income.
Tax is calculated according to the 2025 IRS progressive tax rates, which range from 13.25% to 48%.
The highest rate applies to annual incomes above €81,199.
If you owned the property for over 2 years, an inflation adjustment coefficient reduces the taxable gain.
Portugal allows tax residents to reduce or avoid capital gains tax by reinvesting the proceeds:
Reinvest the proceeds of your primary residence sale into another main residence.
Must occur within 36 months after or 24 months before the sale.
The new home must be in Portugal, the EU or the EEA (with exchange of tax information).
Full exemption requires reinvesting the entire proceeds. Partial reinvestment = proportional taxation.
Available for those 65+ years old or retired.
Proceeds must be invested in a life insurance or pension fund within 6 months.
Annual withdrawals cannot exceed 7.5% of the fund value.
Since January 1, 2023, the rules have changed:
Before, non-residents paid 28% flat tax on the entire gain.
Now, they are taxed like residents: 50% of the gain is added to taxable income under the IRS progressive rates.
A non-resident sells a property in Portugal in 2025 with a €100,000 gain.
Other income abroad: €90,000.
Total income considered in Portugal: €140,000 (90,000 + 50,000).
Taxed at the maximum 48% rate.
Capital gains tax: €24,000 (48% of €50,000).
Under the old rules, tax would have been €28,000 (28% of 100,000).
Both residents and non-residents may deduct:
Transaction costs: IMT, deeds, registry fees, legal fees, real estate agency commissions.
Renovation costs: documented works from the past 12 years, with invoices under the seller’s tax number.
When does capital gains tax apply?
On sales of properties purchased after 1 January 1989.
Does furniture count?
No. A realistic value may be allocated to furniture, which is excluded from the taxable amount.
Does the reinvestment exemption apply to non-residents?
No, only to Portuguese tax residents.
Is there an inflation adjustment?
Yes, after 2 years of ownership.
In 2025, both residents and non-residents are taxed equally: 50% of the gain is subject to IRS. Rates range from 13.25% to 48%, depending on annual income.
With the right planning, you can reduce or avoid this tax, through reinvestment or deductible costs.
If you’re selling property in Portugal, consult a tax advisor to ensure you only pay what is necessary.
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