Tribunal Constitucional Overrides the Fisco on IRS Mais-Valias — Acórdão 330/2026 Widens the Reinvestment Exemption to Construction Credit

The Tribunal Constitucional handed down Acórdão n.º 330/2026 on Wednesday, 22 April 2026, overturning the Autoridade Tributária's long-standing position that the special IRS mais-valias exemption in Article 11 of Law 82-E/2014 applies only to taxpayers who use the proceeds of a home sale to amortise a purchase mortgage. From now on — at least in the case decided and in any case that reaches the Constitutional Court on the same grounds — the exemption also reaches taxpayers who apply the proceeds to amortise a construction loan secured on their own permanent home. The Court held the narrow reading breached Articles 13 (equality) and 103 (tax system) of the Constitution.

What Article 11 of Law 82-E/2014 actually says

Article 11 of Law 82-E/2014 — the 2014 IRS reform statute — was drafted to soften the household deleveraging cost of the post-troika years. It lets an individual who sells a property between 2015 and 2020 (with successive extensions) and uses the net proceeds to amortise the capital on the mortgage securing a permanent own home (habitação própria permanente) escape IRS mais-valias on the gain, even when the sale is not followed by the classic “buy a new home” reinvestment under Article 10 n.º 5 of the CIRS. The catch: the law speaks of “aquisição” of the property, not “aquisição ou construção”. The Autoridade Tributária has consistently read that silence to mean construction loans are out.

The case behind the ruling

The taxpayer sold a property and applied more than €214,000 of the net proceeds to amortise the construction loans on a house he was building as his permanent own home. The Autoridade Tributária disallowed the exemption and issued an additional IRS assessment of €10,254.65 for tax year 2016. The taxpayer challenged it; the Supremo Tribunal Administrativo dismissed the appeal on a strict-literal reading of Article 11. The taxpayer then raised the constitutional question. The Tribunal Constitucional took the case on the equality principle.

What the Court decided

In the reasoning, the Court found no material difference between a taxpayer who borrows to buy a permanent own home and one who borrows to build one. Both carry the same financial burden — monthly capital amortisation, interest, and mortgage collateral on the home — and both rationally fit the purpose of Article 11, which was to help households reduce mortgage debt after the sovereign-debt crisis. Excluding construction financing from the exemption therefore violates the equality principle of Article 13 of the Constitution, with collateral impact on Article 103's tax-system rules on fiscal justice and equal treatment.

The ruling was not unanimous. Conselheiro José Eduardo Figueiredo Dias filed a dissent, arguing that the majority had improperly stretched the statutory text and, in doing so, crossed the separation-of-powers line between courts and Parliament. In his view, expanding the scope of a tax benefit is a matter for the Assembleia da República, not the Constitutional Court.

Scope: concrete case only, for now

Under Article 281 of the Constitution, a declaração de inconstitucionalidade com força obrigatória geral — a ruling binding on everyone — requires at least three concordant Tribunal Constitucional decisions on the same question of law. Acórdão 330/2026 is the first. It directly binds only the parties to the case and the administrative tribunals adjudicating the same dispute. Practically, however, the ruling is a strong signal: taxpayers with pending disputes on Article 11 and construction financing now have a Constitutional Court authority to invoke in their own administrative or judicial appeals. The Autoridade Tributária can continue to assess on the old reading, but every such assessment will now be challengeable.

Who this matters to

The direct beneficiaries are Portuguese tax residents who, between 2015 and the current window, sold a home and applied the proceeds to amortise a construction loan on another home that is or will become their permanent own residence. For foreign residents the story is the same, provided they qualified as tax residents in the year of the sale and of the reinvestment: the exemption runs off residence, not nationality. Expats who built a house in the Alentejo, the Algarve or the Douro interior with a Portuguese bank's construction loan, and funded the amortisation with the sale of their prior Portuguese home, sit squarely in the new reading.

What the ruling does not do

Three important limits.

First, Article 11 only reaches permanent-own-home (habitação própria permanente) amortisation. Second-home, rental, or investment-property construction loans are not covered. Second, the amortisation must be of capital on the loan — interest payments and early-repayment penalties do not count. Third, the sale and the amortisation must both occur inside the legislative window. Taxpayers whose sales fall outside the window have to rely on the classic Article 10 n.º 5 CIRS reinvestment exemption, which has its own 36-month-forward / 24-month-backward rules and which already covers construction, acquisition of land followed by construction, and expansion of a permanent own home.

The bigger picture on Portuguese real-estate taxation

The ruling lands in an unusually active tax-litigation year for Portuguese real-estate. The Tribunal Central Administrativo Sul ruled in early 2026 that inherited-property capital gains must apply the 50% inclusion rule to residents' marginal brackets rather than the flat non-resident rate, quietly reshaping estate planning. Parliament is still processing a government bill that would revise the inflation adjustment coefficients for long-held property. And Bank of Portugal data out this week show high-LTV mortgage credit has multiplied seven-fold since 2024 under the youth housing guarantee. Acórdão 330/2026 fits that arc: a gradual fiscal rebalancing toward household reinvestment and away from the Fisco's narrowest readings.

What to do if you think you are affected

Three practical steps for any taxpayer who was assessed additional IRS in recent years under the old reading.

1. Pull the Modelo 3 IRS declarations for each year from 2015 onwards and identify any Anexo G line where a mais-valias exemption under Article 11 was claimed and partly or wholly denied by AT. Pay special attention to the audit letters (“correcções oficiosas”) and the resulting additional assessments (“liquidações adicionais”).

2. If an administrative appeal (reclamação graciosa) or judicial appeal (impugnação judicial) is still open, or if the limitation period has not yet run, raise the Constitutional Court authority directly. For closed assessments, a revisão oficiosa may be available in specific circumstances; a Portuguese tax lawyer should assess.

3. For current and future sales, document the loan as a construction loan (not a generic mortgage) and keep evidence of the application of the proceeds to capital amortisation. Bank statements, loan-amortisation schedules and the notarised sale deed are the paper trail AT will want.

What to watch next

Two open questions.

First, will a second and third concordant Tribunal Constitucional ruling arrive in 2026, triggering the general-binding-effect declaration? The AT has several pending disputes on Article 11, and their trajectory is now worth monitoring.

Second, will Parliament pre-empt the Court by amending the text of Article 11 to explicitly include “construção”? The PSD–CDS-PP government has an open tax-rectification bill in committee; adding one word would close the litigation at source. The finance committee's working programme for May will be the first indication.

Sources: Tribunal Constitucional Acórdão n.º 330/2026 (22 April 2026); Lei n.º 82-E/2014 of 31 December 2014 (IRS reform), Article 11; Código do IRS, Articles 10 n.º 5 and 41.º; Constituição da República Portuguesa, Articles 13, 103 and 281; ECO (“Constitucional contraria Fisco e alarga isenção de mais-valias em IRS a casas construídas com crédito”, 22 April 2026); Autoridade Tributária ofícios-circulados on Article 11; Supremo Tribunal Administrativo precedent cited in the original appeal.

Related reading: Filing Your IRS in Portugal as a Foreign Resident, Taxes in Portugal Explained (2026), Youth Housing Guarantee +€750M & BdP High-Risk Credit Warning.