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Introduction –
Are you thinking of selling your home or property in Portugal? So, whether you are a expat thinking about moving or a long-time resident or you are an investor looking for chances, one of the things that you should know is that, going through the taxes of selling property in Portugal or Property for sale in central Portugal, then one of the most important things for you is your funds or finances. It is a very complex topic and you should go through capital gains taxes and non-habitual resident status, so that you can plan your next move. Portugal is one such state that speaks loud of the real estate market backed by its rich or luxurious history, beautiful landscapes, and culture that is warm and welcoming. But, when it comes to selling of property, it comes with a good share of taxes.
Tax Benefits & Owing Property of 1989 –
Luckily, Portugal offers many different kinds of tax benefits, which can assist you to mitigate your fiscal obligations when selling a property in Portugal. It is very important for you to know, about the Portugal Capital Gains Tax. Whenever you are selling a property at a high cost, then what you paid for it actually, the profit which you make is known as capital gains. In Portugal country, the profit that you get from selling any property or otherwise is subject to tax, which is known as capital gains tax. But the process is smooth and not at all terrifying. As a resident of Portugal, you will know that 50% of your gain is taxable. And, other merits are that, if you have owned a property for 2 years, then you are eligible for inflation relief. Also, if you have acquired a property before 1989, then you are lucky. Because if you sell any property that you owned in 1989, then you are not subject to capital gains tax at all.
Residence Relief –
The taxable cost from your sale of property will be added to your other income for the year, which is later taxed based on the progressive income tax rates, which at present ranges from 14.5% to 48% i.e., 14.5% for income under 7,479 Euros, and 48% for income over 78,834 Euros. Besides all of these, the tax system in Portuguese offers many reliefs or in other words, rollover rules which can assist you to avert or reduce the capital gains tax. And, these relief’s will come into action, when you sell a property that has been known to be your primary residence. One of the reliefs also comprises of reinvesting in a new pivotal home. If you sell your main residence in Portugal and then reinvest the income gained into other primary residence (net of any mortgage used to gain it), then you can be exempted from capital gains tax. This exemption is not automated. You should declare your reinvestment amount in your tax return statements (IRS) for the year in which you are selling the property. Plus, it is also important that, your new residence should be in EEA (European Economic Area) country that shares the details of the tax with Portugal.
Ownership & Time Importance –
Remember that, time and ownership is important and matters, when selling the property is Portugal. It is important that you buy your new home within 36 months after selling the first home or 24 months before. And, to avoid any further taxes, you should move into your new home within 6 months. The property should be registered in your name. If you are not a resident of Portugal and selling property in Portugal, then the laws of taxation are different. As per the Portuguese laws, the non-residents shall be taxed on the complete gain from property sales in Portugal. The individuals will be charged at 28% and the companies at 25%. Also, the companies located in tax havens the rate has been enhanced to 35%.
