Government mulls IRS exemption on capital gains from house sales

 In Capital Gains, News, Property, Property Tax

Portugal’s centre-right coalition government led by Prime Minister Luís Montenegro is mulling an IRS tax exemption on capital gains from house sales from this year.

According to Jornal de Negócios, the government aims to revoke restrictions on capital gains reinvestment from the sale of property that had been introduced by the previous PS government led by António Costa through the controversial ‘More Housing’ policy.

The new government proposes to scrap it and that an exemption on IRS from capital gains levied on the house seller to purchase another permanent property can only benefit from the exemption once every three years.

The proposed law approved by the Council of Ministers at the end of May and has gone to parliament for discussion, proposes that tax payers who sell their home and use the capital gains to buy a new house to live in as their permanent residence will be able to benefit from capital gains tax exemption.

The Aliança Democrática government’s intention is that the new law would be backdated from 31 December 2023. Therefore, there could be cases in which there are implications on IRS this year regarding income for 2023, and therefore imply handing in a replacement tax form.