Retired or Over 65 and Selling Your Home? Six Months to Reinvest in a Pension Product and Keep the Gain Free of IRS
The AT has reminded older homeowners of an IRS exemption with no end date: reinvest the sale of a permanent home in a life insurance contract, pension fund, Certificados de Reforma or PEPP within six months. The conditions, the Anexo G fields and what voids it.
Homeowners who are retired or 65 or over can sell their main home without paying income tax on the gain, if the money goes into a qualifying retirement product within six months. The Autoridade Tributária e Aduaneira (Tax and Customs Authority, AT) reminded sellers of the rule in a recent social media post, Notícias ao Minuto reported on Saturday. The rule is not new: it sits in Article 10 of the Código do IRS (Personal Income Tax Code), and it has no end date.
It matters because the gain on selling a home is otherwise taxable: Article 43 counts half of it as income, after the purchase price has been raised by the inflation coefficients we explained in October. For an older owner who is downsizing or moving in with family and not buying again, this is the main way to keep the gain untaxed.
Who qualifies and where the money must go
Article 10 sets these conditions, all required:
- Age or retirement. On the date of the sale, the seller or their spouse or unmarried partner must be proven to be retired or at least 65.
- The right home. The property must have been the seller's or household's permanent home, shown by their tax address, in the 12 months before the sale.
- The right product. The sale price, less any mortgage paid off and anything put into a new main home, must go into a life insurance savings contract, an individual membership of an open pension fund, the state's Regime Público de Capitalização (Public Capitalisation Scheme, sold by Social Security as Certificados de Reforma) or a Pan-European Personal Pension Product (PEPP).
- Six months. The money must be invested within six months of the sale.
- A regular income. An insurance contract or pension fund must exist solely to pay the seller or their partner a regular income for at least 10 years, capped at 7.5 percent of the sum invested in any year. A plan that can be cashed in at will does not qualify, so check the contract first.
Investing only part is allowed; the exemption then covers that share of the gain.
What to put on the IRS return
The intention to reinvest must be declared for the year of the sale. Under the AT's instructions for Anexo G (the capital gains annex), the amount you intend to invest goes in field 5012 of Quadro 5A. The sum actually invested goes in field 5013, or in field 5014 on the next year's return if the six months run past 31 December. Quadro 5A2 identifies the product by code (01 insurance, 02 pension fund, 03 public scheme, 04 PEPP), with the date, amount and provider's tax number.
If the conditions are broken
The exemption is lost if the money is not invested within six months, if the payouts in any year exceed the 7.5 percent cap, or if the regular payments stop. The gain is then taxed in the year the six months run out, the cap is exceeded or the payments stop. In a binding ruling issued in November 2025, the AT said the 10 years are a minimum: once they have passed, whatever remains in the product can be withdrawn as a lump sum without losing the exemption.
Decreto-Lei n.º 97/2026 (Decree-Law 97/2026) renumbered the rule in May without changing it. The same decree added a separate, temporary exemption for sellers who reinvest in homes let at capped rents, covering only sales from 2026 to 2029. The over-65 route has no end date. A 2026 sale goes on the 2026 return, filed in 2027.
