Tax on Property Sale

[sunincome]

Please can anyone tell me:
1) If I have sold a property here and have capital gains and then re-invest that profit in a house purchase in the UK, does tax still apply to that gain here in Portugal?

2) How to calculate the tax due here if the money is not re-invested?

Many thanks

[e-richard]

Part of the answer to your questions may be found here.

[biffa]

Only bona fide tax residents can avoid a tax by reinvesting either in Portugal or another EU territory. If you are not tax resident there are NO tax breaks. You will pay 25% on the profit less allowable deduction

[alf1956]

I AM A BIT UNSURE OF THE TAX LAWS HERE IN PORTUGAL SO WOULD BE GRATEFUL IF SOMEBODY OUT THERE COULD EXPLAIN THE QUESTION THAT FOLLOWS PLEASE. IF YOU ARE A NON RESIDENT IN PORTUGAL BUT OWN A PROPERTY DO YOU PAY 25% CAPITAL GAINS TAX ON THE PROFIT YOU MAKE ON THE PROPERTY?

[tricky]

Biffa will confirm that, but Yes that is correct.
You pay 25% on the profit you make less allowable expenses.
These can include, new bathrooms, kitchens etc. If you have the receipts
and other things I'm not too sure about.

[biffa]

Correct Tricky

What is deductible are the following as long as they are supported by properly issued invoices/receipts:
a) Notary fees on acquisition
b) Registration fees on acquisition
c) Sisa (IMT) payment on acquisition
d) Invoices for Structural building works for the previous 5 years
e) Real Estate agent commission.

Note: lawyers fees are still NOT deductible

[Farol]

Am I correct in believing that the residency rule is being challenged by the EU ? It appears contrary to the principle of free trade and movement within EU member states.

[biffa]

Already challenged and that is why, in basic terms, you may now roll over a profit into an investment in any other EU state. You must still be a tax resident in the first place though. Thus if you are tax resident here and are moving to UK you may sell here and reinvest in UK. Previously the reinvestment HAD to be in Portugal.

[Farol]

But I thought you had the right to decide in which member state you wish to have your tax affairs dealt with.

[biffa]

No. That would be great!

You are either tax resident , or not, in a territory depending on the rules of the territory in which you reside. In respect of property situated in Portugal the Portuguese state taxes you on any income or gains made in respect of the use of that. Your home territory may also tax you as well and that is why there are double tax treaties to either prevent that "double taxation" or decide which state actually taxes you - the one where the property/income arises or your tax residency.

In the case refrred to the EU forced Portugal to alter its rules to allow a tax resident to roll over a profit made on a disposal of property in a similar investment anywhere within the EU and NOT just Portugal.

[Mexican Pete]

IF YOU ARE A NON RESIDENT IN PORTUGAL BUT OWN A PROPERTY DO YOU PAY 25% CAPITAL GAINS TAX ON THE PROFIT YOU MAKE ON THE PROPERTY?

The answer depends on how the ownership of the property is structured.

[biffa]

True!