Sold Your Home in 2025? Portugal's New Capital Gains Break for Reinvesting in a Rental Does Not Cover You, the Tax Office Rules

Anyone who sold their home in Portugal in 2025 cannot use the new tax break for capital gains reinvested in a rental property, even if the reinvestment is made this year. The Tax and Customs Authority (AT) has said so in a new binding ruling (informação vinculativa) published on the Portal das Finanças, ECO reported on Monday.

The ruling answers a question from a taxpayer who sold their own permanent home in 2025 and, in the same year, put part of the proceeds into a new home. The taxpayer planned to spend the rest during 2026 on an apartment to be let at a "moderate rent" and asked whether that second purchase would take the gain out of IRS. The answer is no.

The new regime

Decree-Law n.º 97/2026, of 20 May, added three new paragraphs (7 to 9) to Article 10 of the IRS Code. They create what the decree calls a new regime excluding from tax the capital gains on homes when the sale proceeds are reinvested in buying a property to be let as housing. The main conditions, as set out in the Code and summarised by the AT:

• the sale value, minus any outstanding mortgage on the home sold, must be reinvested in property in Portugal intended for residential letting;
• the rent must stay within the legal "moderate rent" ceiling, which is currently 2,300 euros a month;
• the reinvestment must happen between 24 months before and 36 months after the sale;
• the seller must declare the intention to reinvest, even partly, in the IRS return for the year of the sale;
• a residential lease within the rent limits must be signed within six months of the reinvestment (or of the sale, if that came later), unless there is a justified impediment;
• the property must be let for at least 36 months, consecutive or not, within the first five years, and it cannot be sold or given away in those five years or let above the ceiling.

Where only part of the proceeds is reinvested, only the matching share of the gain escapes tax, the ruling adds.

Why 2025 sales are out

The decree says the changes to the IRS Code take effect from 1 January 2026 and that the new paragraphs apply to sales made between 1 January 2026 and 31 December 2029. Under the Code, a capital gain on property is treated as obtained at the moment the property is transferred. So what counts is the date the home was sold, not the date the money is reinvested.

"Given that the transfer took place in 2025, that is, outside the legally defined period," the AT concluded, the gain "does not meet the requirements needed to benefit" from the regime. The taxable event happened before the new rules produced any effect.

What it means for sellers

For owners weighing a sale, the ruling sets a clear line: a home sold on or after 1 January 2026 can still qualify, provided every other condition is met, and the window runs until the end of 2029. A home sold in 2025 cannot, whatever is bought afterwards. The ruling deals only with this new rental regime.

Binding rulings answer one taxpayer's specific case, and the Finance Ministry has said as much when defending earlier AT readings of the capital gains rules. They are nonetheless the clearest public signal of how the tax office will apply the law, and anyone in a similar position may want to check the dates with an accountant before counting on the exemption in next spring's IRS return.