If you are a non-resident selling property in Portugal, the tax bill is no longer the trap it used to be. A 2023 reform ended the flat 28 percent rate that applied to international sellers and brought non-residents into the same regime as Portuguese tax residents. The new system can be substantially more favourable for most sellers, but it is also more conditional and demands a careful read of your wider income picture before you sign.

This 2026 guide explains how capital gains tax (mais-valias) on real estate now works for non-residents, what changed under Lei n.º 56/2023 (Mais Habitação), how the 50 percent inclusion rule combines with progressive rates, when reinvestment relief is available, and what documents and timelines matter when you sell.

How real-estate capital gains tax works in Portugal

The Portuguese personal income tax (IRS) treats real estate gains under Article 10 of the IRS Code (CIRS). The taxable gain is the difference between the sale price and the acquisition cost, adjusted for inflation using the official coefficient tables published annually by Portaria, and reduced by certain deductible expenses: improvements made within the last 12 years, IMT and Stamp Duty paid on the purchase, notary fees, and the sale-side agent's commission.

Article 43 of the CIRS then applies the 50 percent reduction: only half of the net gain is included in the taxpayer's income for the year. This reduction now applies to disposals of real estate by individuals regardless of tax residency, since the 2023 reform.

What changed in 2023: the end of the flat 28 percent

Before 2023, non-residents were taxed at a flat 28 percent on 100 percent of the gain under Article 72 of the CIRS. Portuguese residents, by contrast, included only 50 percent of the gain and paid progressive IRS rates. This dual regime was challenged for years and the European Court of Justice ruled it discriminatory in the Hollmann case (2007), forcing Portugal to allow EU and EEA non-residents to opt for resident-style treatment.

Lei n.º 56/2023 of 6 October, the Mais Habitação package, settled the question for all non-residents. From 1 January 2023, the flat 28 percent rate on real estate gains was revoked. Non-residents are now taxed under the same rules as residents: only 50 percent of the gain is aggregated with their other income and taxed at the progressive rates of Articles 68 and 68-A of the CIRS.

The progressive ladder and what aggregation means

The progressive IRS rates currently run from 13.25 percent on the lowest bracket up to 48 percent on income above approximately €82,000, with a solidarity surcharge of 2.5 percent above €80,000 and 5 percent above €250,000 (2024 reference values; brackets are updated annually). For a non-resident, the rate applied to the 50 percent of your Portuguese gain depends on which bracket you fall into. And the bracket is determined by your worldwide income, not just by the Portuguese gain.

This is the part that surprises most international sellers. Aggregation (englobamento) is mandatory under the new regime, which means you must declare your foreign income on the Anexo G of the Portuguese IRS return so the tax authority can determine the correct bracket. The foreign income itself is not taxed in Portugal, subject to double tax treaties, but it does push the rate applied to your Portuguese gain higher.

In practice: high-income earners abroad can find themselves in a higher Portuguese bracket than they expected; modest earners benefit fully from the lower brackets.

Reinvestment relief: who actually qualifies

Article 10(5) of the CIRS provides full or partial exemption for gains from the sale of a habitual residence (habitação própria e permanente) when the proceeds are reinvested in a new habitual residence within a defined window. The reinvestment may be in Portugal or in any other EU or EEA state with effective exchange of tax information, and the new property must become the taxpayer's permanent home.

For years the prevailing reading was that non-residents could not access this relief because the habitual residence requirement implied Portuguese residency. A 2025 binding ruling by the Portuguese Tax Authority (Processo 28272) confirmed that non-residents can qualify when the property sold was occupied as the household's permanent residence, even if the seller now lives abroad. This is a meaningful opening for retirees and family sellers who left Portugal recently or who maintained a permanent home there before moving.

Conditions to watch:

• The property sold must have been the seller's habitual residence

• Reinvestment must be in another habitual residence

• Window: 24 months before the sale, or 36 months after

• Replacement property must be in Portugal or an EU/EEA state with tax information exchange

• The new home must be used as the permanent residence within 12 months of acquisition

Calculation in three steps

• Step 1: Determine the gross gain. Sale price minus acquisition cost, adjusted for inflation using the official monetary correction coefficient for the year of acquisition.

• Step 2: Subtract deductible expenses: improvements made within the last 12 years (with proper invoicing), IMT and Stamp Duty paid on purchase, notary fees, and the sale-side agent's commission.

• Step 3: Apply Article 43: include only 50 percent of the net gain in the IRS return.

The taxable 50 percent is then aggregated with the rest of your income (Portuguese and worldwide for non-residents) to determine the applicable progressive rate.

Pre-1989 properties are exempt

A small but important note: real estate acquired before 1 January 1989, the date the current IRS Code entered into force, is exempt from capital gains tax. The exemption applies regardless of tax residency. If you inherited or bought a Portuguese property before that date, the gain on sale is outside the IRS regime entirely.

Filing: deadlines and documents

The sale must be reported on the Anexo G of the Modelo 3 IRS return for the year of the deed. The filing window typically runs from 1 April to 30 June of the year following the sale. Non-residents file through the Portal das Finanças and must hold a valid NIF. Sellers resident outside the EU also need a Portuguese fiscal representative (representante fiscal).

Documents to gather:

• Notarial deed of sale (escritura)• Original acquisition documents (deed, IMT and Stamp Duty receipts)• Invoices for improvements made within the last 12 years, with VAT properly itemised• Sale-side agent's commission invoice

• Habitual residence proof (caderneta predial showing usage, residency records) if claiming reinvestment relief

• Proof of reinvestment within the window, if applicable

For the wider Portuguese tax framework affecting property owners, see our legal and tax guidance hub. If you arrived through the new tax incentive regime, our piece on IFICI explained covers how the regime interacts with property income and gains. For the wider market backdrop, see why smart money is doubling down on Portugal in 2026.

FAQs

Do I still pay 28 percent if I am a non-resident?

No. The flat 28 percent rate for non-residents on real estate gains was revoked on 1 January 2023 by Lei n.º 56/2023. You are now taxed on 50 percent of the gain at progressive IRS rates from 13.25 percent to 48 percent.

Do I have to declare my foreign income to Portugal?

Yes, but only for the purpose of calculating the applicable rate. Your foreign income is not taxed in Portugal, subject to double tax treaties, but it determines which bracket applies to your Portuguese gain.

Can I claim reinvestment relief if I live abroad?

Since the 2025 binding ruling (Processo 28272), yes, provided the property sold was your habitual residence and you reinvest in another habitual residence in Portugal or in another EU/EEA state with tax information exchange.

Does the relief follow me to a new home outside the EU/EEA?

No. The relief applies only to reinvestment within the EU or EEA. A new home in the UK, the US, or any non-EEA state does not qualify.

What about pre-1989 property?

Gains on real estate acquired before 1 January 1989 are exempt from IRS capital gains tax, regardless of residency.

When do I have to file?

On the Modelo 3 IRS return for the year of the deed, between 1 April and 30 June of the following year.

This article is for general information and does not constitute tax advice. Each case has specifics that warrant individual review by a Portuguese accountant or lawyer.

Where ICON Property fits in

The capital gains question is one of the last conversations you should be having when you sell a Portuguese property, not one of the first. Pricing, marketing, viewings, and negotiation all sit ahead of it. But the answer reshapes the net proceeds you carry away from the deal, and getting it wrong in 2023-2026 is easier than it used to be because the rules changed substantially and many international advisers are still catching up.

Browse Algarve properties or talk to the team for a sale plan that protects the net.