Selling as a non-resident: how the tax on the gain is worked out

The gain, in plain terms

The gain is what you sell for, less what you paid, less certain costs the law allows. It is not the price on the deed minus the price you once paid, and the difference between those two figures is usually money.

The purchase price is adjusted for inflation where you have owned the property for more than two years, using a coefficient published each year. Then four kinds of cost come off: the property transfer tax (IMT) and stamp duty you paid when you bought, the notary and registration fees from that purchase, the estate agent’s commission on the sale, and the cost of improvement works carried out in the twelve years before you sell.

The condition that decides the last one

Improvement works are deductible only if you can produce the invoices. Not a bank statement, not a builder’s quote — a proper invoice, issued to you, with your Portuguese tax number on it.

This is the single most expensive detail in the whole calculation, and it is settled long before anyone is thinking about selling. A kitchen replaced eight years ago with paperwork in order reduces the tax. The same kitchen, paid in cash without an invoice, does not exist as far as the calculation is concerned.

The rates, and why your income elsewhere matters

Since 2023, non-residents are taxed on these gains in the same way as residents: half the gain, at progressive rates rather than at a flat rate. Progressive means the rate rises in steps as income rises.

Portugal applies those steps in a way that is worth understanding, because it is not the way most countries do it. You do not tax each slice of income at its own rate. You take the rate of the highest bracket your income reaches, apply it to the whole of your taxable income, and then subtract a fixed amount for that bracket. The fixed amount is what corrects for the lower rates you would otherwise have paid on the earlier slices.

The effect is the same, and it carries a reassurance worth stating: crossing into a higher bracket never leaves you worse off overall. Only the amount above the threshold is affected.

The brackets and their corresponding amounts for 2026 are these.

A worked example. Taxable income of €20,000 falls in the fourth bracket, so the rate is 24.1%. Applied to the whole €20,000 that gives €4,820, from which €1,476.45 is subtracted. The tax is €3,343.55 — an effective rate of 16.7%, not 24.1%.

Above €80,000 a further solidarity surcharge applies: 2.5% between €80,000 and €250,000, and 5% above that.

To establish which steps apply, the taxable half of the gain is combined with your other income. And that is where a detail catches most sellers by surprise: income earned outside Portugal has to be reported, in a field that is mandatory on the return.

The return is the Modelo 3, and property gains are declared on its Anexo G. On that annex, the foreign taxable income of a non-resident is a required entry — not an optional disclosure and not something that can be left blank. Portugal does not tax that foreign income. It uses it to work out the rate that applies to the Portuguese gain.

The practical consequence is worth stating plainly, because it is usually the part nobody warned the seller about. Two people selling identical properties for identical prices can pay materially different amounts of Portuguese tax, according to what they earn in the country where they live.

The timing nobody controls afterwards

The gain is reported in the Portuguese tax return for the year following the sale. By then every variable is fixed: the price is agreed, the deed is signed, the invoices either exist or do not.

Which is why the useful moment to calculate this is before the price is agreed. The arithmetic is not difficult. It is simply worth doing while the answer can still change something.