Choque Fiscal Diploma Pauses the 36-Month Mais-Valias Reinvestment Clock Whenever a Court Action Blocks the Home Purchase — Finance Ministry Closes the Loophole That Forced Sellers to Eat IRS on Delayed Buys

Portugal's IRS code is gaining a structural exception that property tax practitioners have argued for nearly a decade: under the housing-package diploma published in the Diário da República on 20 May and clarified by Jornal de Negócios on Monday 25 May, the 36-month deadline that homeowners have to reinvest a primary-residence sale in another primary residence will now pause whenever a judicial action blocks the purchase through circumstances outside the buyer's control.

Until this change, the rule was inflexible. A Portuguese resident who sold their primary residence carried a 36-month window to commit the proceeds into another primary home; failing that, the gain was treated as ordinary capital gains under IRS, with 50% of the gain added to other income at marginal rates that can reach 53%. Litigation by a non-performing seller, planning-permission delays at the Câmara, or a banking step that fell through inside the closing window all counted equally as missed deadlines. The Autoridade Tributária had repeatedly refused to grant case-by-case suspensions even where the buyer could prove the delay was external.

The new wording, inserted into article 10 of the Código do IRS, allows the deadline to be suspended when reinvestment is blocked by a "supervening cause" outside the taxpayer's control. The legal effect is to stop the clock during the period the obstruction lasts; once the impediment is removed — typically when the litigation closes or the planning consent is issued — the unused portion of the 36-month window resumes. Tax practitioners reading the diploma stress that the suspension is automatic at the AT only if the taxpayer documents the chain of events and the original judicial action; otherwise the rule passes through tribunal review.

The reform addresses a specific complaint that has clogged the Tribunal Arbitral Tributário (CAAD) for years. Buyers who were forced to litigate against sellers — typically over hidden defects, contested registration, or failed scrivener completion — were being taxed on the very gains they were trying to roll forward, while still locked in court fighting over the purchase they had agreed to. The Constitutional Court has previously flagged the rigidity of the original 36-month clock as raising proportionality questions; the Choque Fiscal diploma forecloses the constitutional litigation track on that front.

A second, distinct benefit also enters the same diploma. A primary-residence seller who applies the proceeds to a home that will be placed on the rental market at moderate rents — within the parameters of the Programa de Apoio ao Arrendamento brackets — gains the same mais-valias exemption available to owner-occupier reinvestors. Officials at the Ministério das Finanças told Jornal de Negócios on Monday that the policy intent is to broaden the supply of rental stock without forcing landlords to lose the tax shielding currently reserved for owner-occupier reinvestment chains.

The change is the headline tax measure inside the broader Choque Fiscal package, which also lowers IVA on construction to 6% for affordable-housing projects, reduces IRS on landlord rental income inside the moderate-rent track, and resets IMT for non-residents at 7.5%. The package, billed by the government as the most consequential housing tax intervention since the 2007 Imposto Único de Transmissão, has been gazetted with all implementing regulations and takes effect through the rest of 2026 fiscal year.

Sources: Jornal de Negócios, ECO, Diário da República, Ministério das Finanças.