Did you sell your house and make a profit? Congratulations! But before you plan how you are going to invest that money, you need to understand the rules regarding Capital Gains (Mais-Valias). In Portugal, the State taxes the profit from real estate sales, but there is a legal "master key" to becoming exempt from this tax: Reinvestment in a Primary Residence (HPP).
What is the Reinvestment Exemption?
Capital gains are the profit you obtain when you sell a property for a higher price than you bought it (adjusted for inflation and documented expenses).
The Golden Rule: If you sell your home (which must be your fiscal address/primary residence) and use the proceeds from that sale to buy, build, or renovate a new home—also for your primary residence—you can be totally or partially exempt from paying tax on that profit.
Why Does This Matter to You?
Asset Protection: Without this exemption, 50% of your profit is added to your annual income tax (IRS) and taxed at general rates, which could mean handing over thousands of euros to the State.
Purchasing Power: By not paying this tax, you have more capital available for the down payment on your next home or to reduce the amount of your new mortgage.
Life Planning: It allows your family to "upgrade" (for example, moving from a 2-bedroom to a 3-bedroom) without being fiscally penalized for doing so.
How It Works: The Deadlines and Rules You Must Follow
To benefit from the exemption, simply buying another house isn't enough. You must meet strict criteria:
Reinvestment Deadlines: You can buy the new house between 24 months before the sale or up to 36 months after.
The Total Value: For a full exemption, you must reinvest the total sale price (minus the amount of the mortgage you paid off during the deed). If you only reinvest a portion, the exemption will be proportional.
Tax Returns: You must declare your intention to reinvest in Annex G of your IRS return in the year following the sale.
What You Can Deduct to Pay Less (Even Without Reinvesting)
If you do not intend to reinvest the total amount, TeamQASA helps you organize the expenses that lower your tax burden:
Our real estate commission (keep the invoice!).
Home improvement works completed in the last 12 years (always with an invoice including your NIF/Tax Number).
Deed costs and taxes (IMT and Stamp Duty) that you paid when you originally bought the property you just sold.
The TeamQASA Perspective
At TeamQASA, our consultancy goes far beyond the sale. During Phase 6 of our Sales Process, we help you calculate potential capital gains and organize your "IRS Dossier."
We want to ensure that the profit from the sale of your property serves to boost your future, rather than paying unnecessary taxes due to a lack of planning.
Are you going to sell your house and want to know how much you can save on taxes?
Talk to TeamQASA. We will do the math with you and map out the best reinvestment strategy for your specific case.