Below you’ll find the key points for 2026 in a clear, practical format, plus a simple checklist at the end.
What are real estate capital gains?
Real estate capital gains are, in simple terms, the profit you make when you sell a property—the positive difference between the sale price and the purchase price, after applying the adjustments allowed by law.
This profit is treated as income and may therefore be subject to Portuguese Personal Income Tax (IRS).
What does the law say? (legal framework)
In Portugal, capital gains from the sale of property fall under Article 10 of the Portuguese IRS Code (CIRS), within Category G (capital/increases in wealth).
In practice, whenever there is a gain on sale, it can have a tax impact—unless you meet the conditions for an exemptionor a tax benefit.
How are capital gains taxed in Portugal?
Tax treatment depends on your tax residency:
1) Portuguese tax residents
  • 50% of the capital gain is included (“englobed”) with your other income;
  • The tax rate applied follows the progressive IRS brackets, depending on your taxable income level.
2) Non-residents
  • As a general rule, the entire capital gain is taxed at a flat autonomous rate of 28%.
Important: the law provides exemptions and tax relief, particularly through reinvestment into a new primary residence.

How do you calculate real estate capital gains? (step-by-step)
You can use a simulator/calculator, but here’s the logic behind it:
1) Determine the sale value (“valor de realização”)
This is the amount you sold the property for, potentially reduced by direct selling costs, such as:
  • Real estate agency commission;
  • Notary/deed-related costs.
2) Calculate the adjusted purchase value
This typically includes:
  • The currency devaluation coefficient (inflation adjustment);
  • Purchase costs (e.g., IMT, stamp duty, deed and registration fees);
  • Works/improvements carried out in the last 12 years that increased the property’s value (supported by invoices).
3) Calculate the gross capital gain
Sale value – adjusted purchase value
4) Determine the taxable capital gain
After calculating the gain, you determine what portion is taxed (e.g., the 50% inclusion for residents, where applicable).
Which expenses can be deducted from capital gains?
Certain costs can reduce the taxable gain, namely:
  • Purchase-related costs: IMT, stamp duty, deed and registration fees;
  • Sale-related costs: real estate brokerage commission (and other direct selling costs), energy certificate;
  • Works/investments made in the last 12 years (improvements, conservation, etc.), provided they are documented with invoices.

How to avoid paying (or reduce) capital gains tax: common exemptions
There are legal situations where you may be fully or partially exempt. The most relevant are:
1) Properties acquired before 1 January 1989
  • The sale may be exempt from capital gains tax;
  • You still need to report the sale on your IRS return using Annex G1.
2) Reinvestment into a primary and permanent home (HPP)
If you sell your primary residence and reinvest the sale proceeds (in whole or in part) into another primary residence, you may qualify for a full or partial exemption, if you meet the conditions, such as:
  • Declaring your intention to reinvest in your IRS return;
  • Reinvesting within 36 months after the sale or 24 months before the sale;
  • Using the new property as the main residence for you/your household.
This is one of the most common and effective ways to significantly reduce capital gains tax.
3) Sale to public entities
In certain cases, selling to the State or public bodies (e.g., municipalities) may be exempt, under the applicable legal terms.
Additional exemptions that may apply in 2025
1) Over 65 or retired due to old age
A full exemption may apply if:
  • The property sold is your primary residence; and
  • The sale proceeds are reinvested within 6 months into an eligible financial insurance contract, pension fund, or PPR (retirement savings plan), designed to provide lifelong income or a retirement supplement.
2) When there is no capital gain
If you sell for the same price or less than the purchase price (after inflation adjustment)—or if costs and improvements effectively eliminate the profit—there may be no taxable capital gain.
How to report capital gains on your IRS return
Reporting is done in IRS Form 3, using:
  • Annex G: for capital gains subject to taxation;
  • Annex G1: for capital gains exempt from tax (e.g., properties acquired before 1989).

What happens if you don’t report capital gains?
Failure to report properly may lead to:
  • Fines and penalties;
  • Compensatory interest on unpaid tax;
  • Potential tax inspection by the Portuguese Tax Authority.

Documents you’ll need to report capital gains
To prepare the sale and your annual return smoothly, gather:
  • Deed/contract for the purchase and sale;
  • Proof of purchase and sale expenses (invoices/receipts);
  • Invoices and proof of payment for qualifying works (last 12 years);
  • Property registry certificate (“certidão de teor”) from the Land Registry Office.

Quick checklist to sell without surprises
Before you move forward:
  • Confirm whether the property was acquired before 1989
  • Check if it is a primary residence and whether reinvestment makes sense
  • Organize invoices for works and expenses
  • Run scenarios (with and without reinvestment)
  • If you have tax doubts, speak with an accountant

Want to sell and plan your reinvestment strategically?
At Incredible Real Estate, we support you from start to finish—pricing, presentation, marketing, negotiations, and coordinating the process so your next move (including reinvestment planning) is as smooth as possible.
If you’re thinking of selling in Braga (or nearby) and want a clear strategy and confident support, get in touch with us. We’ll help you map out the best path and identify opportunities that fit your next step.