How Is Capital Gains Tax Calculated?

To calculate a potential capital gain, the following are usually taken into account:

Purchase & Sale Values

• Purchase price shown on the original deed (Escritura)
• Final sale price shown on the sale deed

Allowable Deductible Expenses

Certain documented costs can usually be deducted from the taxable gain, including:

Property Improvement Costs

These may include:

• Structural renovations
• New windows and doors
• Extensions or major improvements
• Roof works or permanent upgrades

To qualify:

• The work must genuinely improve the long-term value of the property
• Valid invoices must be provided
• The work generally needs to have been completed within the legally accepted timeframe before sale

Furniture, decoration, and standard maintenance are generally not deductible.

Buying Costs

Allowable purchase costs may include:

• IMT (Transfer Tax)
• Stamp Duty
• Registration and notary costs

Selling Costs

Allowable selling costs may include:

• Estate agency commission
• Energy certificate costs
• Legal fees related to the sale

Capital Gains Tax for Portuguese Residents

For tax residents in Portugal:

• Only 50% of the capital gain is typically taxable
• This amount is added to the individual’s annual income
• Progressive Portuguese income tax rates apply

Portugal’s progressive tax rates currently range up to approximately 48%, with additional solidarity taxes potentially applying at higher income levels. (PwC Portugal)

Capital Gains Tax for Non-Residents

The rules for non-residents changed significantly in recent years.

Current Rules (2026)

For non-resident individuals selling Portuguese property:

• Only 50% of the gain is considered taxable
• The gain is now taxed using Portugal’s progressive tax rates
• Worldwide income may be considered solely to determine the applicable tax bracket

This aligns the treatment of non-residents more closely with Portuguese tax residents following changes introduced from 2023 onward. (PwC Portugal)

Foreign income itself is not necessarily taxed in Portugal, but it may influence the tax rate applied to the Portuguese capital gain.

Possible Exemptions & Reductions

In certain circumstances, capital gains tax may be reduced or deferred.

Examples may include:

• Reinvestment into another qualifying primary residence
• Certain residency scenarios
• Specific tax treaties or exemptions

The rules are complex and depend heavily on personal tax residency status and timing.

Important Considerations

Capital gains taxation depends on many factors including:

• Residency status
• Property type
• Ownership structure
• Purchase and sale dates
• Documentation and invoices available
• Reinvestment intentions

Because Portuguese tax law changes regularly, professional advice is strongly recommended before selling a property.

Professional Advice Is Essential

While this guide provides a general overview, capital gains tax calculations can be complex and highly individual.

At Predimed Smart, we always recommend speaking with:

• A qualified Portuguese accountant
• An independent lawyer
• A tax specialist familiar with international clients

This ensures you receive the most accurate and up-to-date advice for your specific situation.

Selling Property in Portugal

If you are considering selling your property in Portugal, our team can guide you through:

• The sales process
• Estimated selling costs
• Legal and tax considerations
• Market valuations and strategy

Contact Predimed Smart for expert guidance on selling property in Portugal with confidence.