Exemption from Capital Gains

Law No. 56/2023 in Portugal introduces a temporary exemption from capital gains for those who sell secondary properties or building land and use the sale value in the repayment of a permanent home loan, either from the owner himself or from his children. This regime represents an important tax incentive, since capital gains are usually taxed in the IRS, which makes the sale of real estate often disadvantageous. The measure applies to sales completed by December 31, 2024.

The objective is to stimulate the sale of inherited or unoccupied properties that, because of the high tax burden, often remain empty or deteriorating. In many cases, owners choose to keep these properties without generating income, waiting for tax relief. With this regime, by selling and using the sale value to reduce housing debt, they can avoid capital gains tax, which can boost the market and facilitate access to housing.

The measure is particularly beneficial for those who inherited real estate, as capital gains are calculated on the original acquisition value, which is often low, resulting in high taxes in the event of a sale. For properties under the co-ownership regime, common in inheritances, the regime offers a chance for liquidity without the tax burden, especially relevant when consensus between owners is required for the sale.

Despite the benefits, the effectiveness of this regime may be limited by the short term of validity until the end of 2024, which may be insufficient for many who intend to take advantage of the exemption. The process of selling real estate, especially in co-ownership, is lengthy and may require more time for the measure to reach its potential. Given the market context and the expected positive impact, it is suggested that the government consider extending the exemption period, allowing more properties to enter the market and more people to acquire their own home, contributing to household liquidity and housing debt relief in Portugal.

Source: Diário Imobiliário