Capital gains are taxable — but there is not always tax to pay. When you sell a property, the gain may be subject to income tax (IRS) on the capital gain. There are, however, significant exemptions — and the 2026 tax package added a new one. Knowing them in time is what allows the sale to be structured without surprises.
How the gain is taxed
On a sale by an individual, the capital gain (the difference between the realisation value and the acquisition value, adjusted and increased by charges) is, as a rule, taxed under IRS — for properties held by individuals, only half of the gain (50%) is considered and aggregated with other income, save for exceptions. That is why the acquisition date and value, and documented charges, matter.
Exemption for reinvestment in your own home
The gain on the sale of a permanent own home is excluded from tax if the realisation value is reinvested in another permanent own home, within the legal deadlines (as a rule, between 24 months before and 36 months after the sale). Partial reinvestment gives a proportional exemption.
The 2026 novelty: reinvesting in rental housing
Decree-Law No. 97/2026 of 20 May now excludes from tax the real estate capital gain where the sale proceeds are reinvested in property intended for residential letting. It is a new route for those wishing to keep capital in real estate while directing it towards rental supply.
Other situations to consider
There are also specific regimes — such as properties acquired before 1989, excluded from capital-gains tax — and particularities regarding inheritances, exchanges and works. Each case requires confirming the framework before the sale, not after.
Before selling, confirm whether (and how to avoid) tax
A prior analysis of the gain, the applicable exemptions and the reinvestment timeline can mean the difference between paying tax and not paying it — lawfully.
Are you selling a property? Paulo Silva Silva, Lawyer, structures the operation and its tax framework, working alongside your accountant. Book a meeting or contact paulosilvasilva.adv@gmail.com · 916 055 901.
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Housing Tax Package · Property taxes (IMT, Stamp Duty, IMI, AIMI) · Real estate investment lawyer in Margem Sul
The information in this article is general and institutional in nature; it does not constitute legal advice and does not create a client relationship. The capital-gains regime (Personal Income Tax Code) and Decree-Law No. 97/2026 should be confirmed in the version in force in the Diário da República (dre.pt) and with the Tax Authority before any decision.