Capital Gains Tax on Property in Portugal: How Mais-Valias Works

• Your taxable gain is the sale price minus the acquisition value (adjusted for inflation) and allowable costs — not the raw difference between what you paid and what you sold for.
• Residents only pay tax on 50% of the gain, which is then added to your other income and taxed at IRS's progressive rates (englobamento) rather than a flat rate.
• Non-residents used to be taxed on 100% of the gain; Portuguese and EU courts ruled that discriminatory, so non-residents now get the same 50% treatment as residents.
• Sell your primary home and reinvest the proceeds into another primary home — in Portugal or the EU/EEA — within the legal window, and the gain can be excluded from tax entirely.

Mais-valias imobiliárias — capital gains on real estate — are taxed under Category G of the IRS (Código do IRS, Art. 9.º and 10.º). The gain arises whenever you dispose of real rights over immovable property for consideration: a sale, but also a swap, an expropriation payout, or a dação em pagamento. It applies whether the property was your primary home, a second home, a rental, or land, and whether you bought it, built it, or received it as a gift or inheritance.

How the taxable gain is calculated

The formula is: gain = valor de realização (sale value) − valor de aquisição (acquisition value, adjusted) − despesas e encargos (allowable costs). Each of those three pieces has its own rule under the CIRS.

• Valor de realização: normally the price stated in the deed, but if the property's taxable value (Valor Patrimonial Tributário, VPT) at the time of sale is higher, that higher figure is used instead (Art. 44.º).
• Valor de aquisição: what you paid for it, or — if it was inherited or gifted — the value used for Stamp Duty (Imposto do Selo) purposes at the time (Art. 45.º and 46.º).
• Correção monetária: if you held the property for more than 24 months, the acquisition value is adjusted upward for inflation using official coefficients the Finance Ministry publishes every year by year of acquisition (Art. 50.º).
• Despesas e encargos you can deduct: proven valorization/renovation costs from the last 12 years (with invoices), the IMT and Stamp Duty you paid when you bought it, real estate agent commissions, and other necessary costs of the purchase and sale (Art. 51.º).

Worked example: you bought an apartment in 2015 for €150,000 and sell it in 2026 for €280,000, with €10,000 in deductible costs (agency fee, IMT paid on purchase, a documented renovation). Because you've held it more than 24 months, the €150,000 acquisition value is first bumped up by that year's official coefficient before being subtracted from the €280,000 sale price — so the taxable gain is smaller than the raw €130,000 difference.

Only 50% is taxable for residents — englobamento

For tax residents, the net balance between the year's gains and losses on property sales is only counted at 50% of its value (Art. 43.º, n.º 2). That 50% is then englobado — added to your other categories of income (salary, freelance work, rent) — and taxed at IRS's progressive brackets, not at a flat rate. The one carve-out: gains on properties that received government non-repayable support worth more than 30% of their VPT, and sold within 10 years, are counted at 100% instead.

You report the sale on Modelo 3, Anexo G — Quadro 4 for real estate — declaring the acquisition and realization dates, values, and deductible costs for each property.

Non-resident treatment: same 50% break, different filing

Portugal used to tax non-residents' property gains on 100% of the balance at a flat rate, while capping residents at 50%. The Court of Justice of the EU and Portugal's own courts and arbitration tribunals (CAAD) ruled repeatedly that this breached the EU's free movement of capital (Art. 63.º TFEU) — citing the CJEU's Hollmann and MK rulings. Portugal changed the CIRS in response: property gains are now carved out of the general rule that non-residents' income isn't englobado (Art. 22.º, n.º 3, al. a)), so non-residents also only pay tax on 50% of the gain, combined at progressive rates rather than taxed flat on the full amount.

In practice, non-residents still need a NIF and, if living outside the EU/EEA, a fiscal representative, and must file a Portuguese Modelo 3 declaring the sale — the 50% relief doesn't remove the obligation to file.

The primary-residence reinvestment exclusion

The biggest break available: gains from selling your (or your household's) habitação própria e permanente can be excluded from tax entirely if you reinvest the proceeds into another primary home, cumulatively meeting all these conditions (Art. 10.º, n.º 5):

• The property sold must have been your registered tax domicile (habitação própria e permanente) for at least the 12 months immediately before the sale — reduced from 24 months by Decreto-Lei n.º 57/2024.
• You reinvest the realization value — net of paying off any mortgage still owed on the old home — into buying, building, or improving another primary home, located in Portugal or elsewhere in the EU/EEA, provided that country exchanges tax information with Portugal.
• The reinvestment window runs from 24 months before the sale to 36 months after it.
• You must declare your intention to reinvest, even if only partially, in your tax return for the year of the sale.
• Reinvesting only part of the proceeds still helps — the exclusion applies proportionally to the share you reinvested (Art. 10.º, n.º 12).

You can lose the benefit after the fact: if you buy another home but don't move your tax domicile into it within 12 months, or (for new construction or improvement) don't register the change and move in within the legal deadlines, the gain becomes taxable retroactively, plus compensatory interest (Art. 10.º, n.º 6). Certain life events — marriage, divorce, or a new dependant — count as exceptional circumstances that excuse a missed domicile requirement (Art. 10.º, n.º 26), and a binding ruling from the Tax Authority (Informação Vinculativa n.º 29240/2026) confirms that a home received by donation can still qualify as your habitação própria e permanente if your registered tax domicile has been there long enough, even if you've only owned it a short time.

Two narrower alternatives exist alongside the primary-home reinvestment: sellers who are retired or aged 65+ can instead put the proceeds into a life insurance contract, an open pension fund, or the public capitalisation scheme within 6 months of the sale (Art. 10.º, n.º 10); and for transmissions between 2026 and 2029, sellers can reinvest into rental housing at capped rents instead of another home of their own. Declare the reinvestment on Anexo G, Quadro 5A.