Tax implications on House Sales

Here's What You Should Consider when buying a property in Portugal in Terms of Tax Implications:

Direct Investment vs. Corporate Structure:

o    Direct Investment: Offers simplicity and potential exemption from capital gains tax if reinvested in another property for the same purpose.

o    Corporate Structure: Suitable for entrepreneurial activities like Airbnb, but caution is advised regarding tax-haven entities.

Acquisition and Holding Taxes:

o    Real Estate Transfer Tax (RETT) and Stamp Duty amount to 6.8% (or 8.3% for properties over €1 million) based on the purchase price or Tax Registered Value (TRV).

o    Additional costs include notarial and registration fees.

Annual Property Tax:

o    Levied on the TRV at a rate of up to 0.45% depending on the municipality.

Invest Wisely and Seek Tailored Advice:

o    Consider your investment goals, residency status, and individual circumstances.

o    Professional advice is crucial before investing in Portuguese real estate.

Remember that tax laws can be complex, so personalized advice is crucial. Always consult with a professional to make informed decisions.

Are you thinking of Selling Your Residence in Portugal? Here's What You Need to Know

When selling your residence in Portugal, navigating the intricacies of capital gains tax is essential. Here's a breakdown of the key points:

Capital Gains Tax for Residents:

o    As of 2021, residents are taxed on only 50% of their gains from selling a property.

o    Inherited properties follow the same rule, with only 50% of the capital gain subject to taxation.

o    This amount is added to other income to determine the applicable IRS rate.

Capital Gains Tax for European Union Residents:

o    EU residents pay capital gains tax at 50%, based on marginal tax rates ranging from 14.5% to 48%, plus a solidarity tax of 5%.

o    Income earned abroad is also taken into consideration.

Capital Gains Tax for Non-European Union Residents:

o    Non-EU residents, including UK expats not residing in Portugal, are subject to a flat rate of 28% on the full capital gain.

Strategies to Avoid Capital Gains Tax:

o    Reinvest the sale proceeds in another permanent home within 36 months after the sale or 24 months before the sale.

o    Properties acquired before 1989 are exempt from capital gains tax.

o    When the individual is over 65 years of age or retired and invests the capital gains obtained can be used for life insurance, individual membership of an open pension fund, or contributions to the public capitalization regime within six months after the sale.