If you have sold your usual residence (your own permanent home) and intend to reinvest, it is essential to do the maths and know which investment is the most advantageous!
Together we can do this analysis!
SALE OF OWN PERMANENT HOUSING WITH REINVESTMENT
(NEW RULES Decree-Law No. 57/2024, of September 10)
Requirements:
It is mandatory to reinvest the realization value, after deducting the amortization of any loan used to acquire the property, in the acquisition of ownership of another property, of land for construction or in the construction/expansion/improvement of a property for the same purpose , located in Portugal or in another member state of the European Union or the European Economic Area (provided that tax information is exchanged with the latter).
Reinvestment must occur between 24 months before and 36 months after the date of sale.
The property sold must have been used as your own permanent home by you or your family in the 12 months before the sale (proven by tax residence).
The 12-month criterion can be ignored if there have been changes in the household (such as marriage, stable union, dissolution or increase in the number of dependents).
To understand the calculations, it is necessary to distinguish some concepts:
Capital Gain = Realization Value - Acquisition value x coefficient - Expenses and Charges
Taxable gain = Capital gain x 50%
Gain from sale = Realization value - Mortgage value
Acquisition value: value used to calculate the Municipal Transmission Tax
Realization value: Sales value or Tax Asset Value (whichever is higher)
How much must be reinvested to be completely exempt from income tax on capital gains? Response:
Value to be reinvested = (realization value - amortization of the loan taken out to acquire the property).
The amount to be reinvested is not the value of the capital gain!
If you don't reinvest the full amount required for the full exemption, you don't lose the benefit!
In this case, the benefit will be proportional to the amount reinvested.
Important Notes:
1. Only the amount invested with Equity counts as reinvestment.
2. Expenses with the purchase of new Own Permanent Housing (such as Municipal Transfer Tax, Stamp Tax, etc.) do not count as reinvestment.
Where can you apply this reinvestment?
Purchase of another property intended for Permanent Own Housing.
Acquisition of land for construction of property and/or respective construction.
Expansion or improvement of another property.
To find out more about how you can increase profitability in real estate through tax optimization or clarify any questions, do not hesitate to contact us www.abracadabra.pt
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