Tax authority limits capital gains exemption for joint property purchases
The Tax and Customs Authority (Autoridade Tributária e Aduaneira) has clarified that the capital gains tax (mais-valias) exemption for reinvesting in a primary residence is limited when a property owned by one person is sold to buy a home jointly. In such cases, the tax benefit only applies to the share of the new property corresponding to the original owner, typically 50%. Homeowners planning to sell a property they purchased while single to buy a new home with a partner should be aware of these potential tax liabilities.
Capital gains tax (mais-valias) is a tax on the profit made from selling an asset like a house. Residents are typically taxed on 50% of the gain, which is often more favorable than the 100% inclusion used in the UK or the 36.2% total rate in France. Homeowners should note that the tax authority (Autoridade Tributária or AT) recently ruled that reinvestment benefits only apply to the original owner's share when buying a new property jointly.
