What are real estate capital gains?
Real estate capital gains arise when a property is sold for a value higher than its acquisition cost. The taxable gain generally corresponds to the difference between the selling price and the acquisition value, adjusted for certain legally deductible expenses.
If the property is in Portugal, the gain is considered Portuguese-source income and may be subject to taxation.
Previous regime for non-residents
Until 2022, non-resident individuals were taxed differently from residents.
The entire capital gain resulting from the sale of property was taxed at a flat rate of 28%, without applying the progressive income tax system used for residents.
Current regime since 2023
Legislative changes introduced in 2023 significantly altered this framework. Under the current rules:
- Only 50% of the capital gain is considered for taxation purposes.
- This amount is subject to progressive Portuguese personal income tax rates, which can range up to approximately 48%.
- Non-resident taxpayers must declare their worldwide income to determine the applicable tax rate.
Reporting obligations
Non-residents selling property in Portugal must comply with several reporting obligations, including:
- Filing the Portuguese personal income tax return.
- Reporting the transaction in the capital gains schedule.
- Declaring foreign income for the purpose of determining the progressive tax rate.
How Nominaurea can help
The taxation of real estate capital gains can raise several questions, particularly when it involves non-resident taxpayers, foreign income and different tax frameworks.
Nominaurea provides specialised support to investors and property owners selling real estate in Portugal, ensuring comprehensive tax guidance throughout the entire process.
Key services include:
- Pre-sale tax analysis, estimating the capital gains tax due and assessing the tax impact of the transaction.
- Assistance with Portuguese tax reporting obligations, including the preparation and submission of the personal income tax return.
- Tax planning for international investors, considering Portuguese legislation and double taxation treaties.
- Ongoing tax and accounting advisory services for property owners and real estate investors.
With a technical, transparent and results-driven approach, Nominaurea helps both national and international clients comply with their tax obligations and make informed decisions in the Portuguese real estate market.
Conclusion
The reform implemented in 2023 represents an important step towards equal tax treatment between residents and non-residents in Portugal. By taxing only half of the capital gain and applying progressive tax rates, the system is now more balanced and aligned with European legal standards.
For international investors and foreign property owners, understanding these rules is essential for effective tax planning when selling real estate in Portugal.
