What changed this week
Portugal's tax authority has confirmed to the business paper ECO something many families hoped would go the other way. The new regime that exempts from IRS the gain on selling your main home, when the money is reinvested in housing for rent, only applies to sales from 1 January 2026.
If you sold in 2025 and bought a property to let out, you are not covered. The gain on that sale is still taxed under the old rules.
It helps to keep two cases apart. If you sold your home and bought another one to live in, the exemption for reinvesting in a main home already existed and still does, with its own deadlines and conditions. This week's news only concerns people who swapped the home they lived in for a home to rent to someone else.
What it can cost, with numbers
Round numbers. A couple bought their flat in 2010 for €150,000. They sold it in 2025 for €300,000 and used the money to buy an apartment they now rent to a family.
The headline gain is €150,000. The tax return does not see it that way. The purchase price is adjusted by an official coefficient that corrects for inflation, and you can deduct costs such as the IMT and stamp duty paid when you bought, improvement works done in the last twelve years and the estate agent's fee. Say that after all of this the taxable gain comes to €120,000.
For Portuguese tax residents, only half of that gain counts: €60,000. It is added to the household's other income and taxed at the normal progressive IRS rates. If the couple has €40,000 of taxable income a year and files jointly, the extra €60,000 pushes a good part of their income into the higher brackets.
On a simplified calculation, the extra tax could be around €20,000. Spread over twelve months, that is roughly €1,700 a month for a year. More than many mortgage payments. Under the new exemption, for someone who met its conditions, the figure would be zero.
That is a large gap for a decision that often comes down to the date on the deed.
What we do not know
This example shows the order of magnitude. It is not your tax return. The real figure depends on the year you bought, the costs you can prove with invoices, your household income and whether you file jointly or separately.
We also do not yet know every practical detail of the new regime: the reinvestment deadlines, any cap on the rent you can charge, or the minimum period the property must stay rented. Read the final rules before you rely on them. And tax rules can change from one State Budget to the next.
There is also the question of dates. As a rule, what counts is the date of the deed, the escritura. But if you handed the keys to the buyer before that, the relevant date may be different. That is one of the questions to put to someone who knows.
The one thing to do this month
It depends on where you stand.
You already sold in 2025 and bought a rental. Estimate the tax now and move that money into a separate account. The sale goes on the IRS return you file in spring 2026, and any balance is normally due by the end of August. Gather the invoices for works, your original purchase deed, proof of the IMT you paid and the agent's invoice. Every cost you can document lowers the taxable gain.
You are thinking of selling and buying a place to let. If you have not signed the deed yet, see whether it can be scheduled for 2026. Before you close, ask an accountant to model both options with your real numbers. An hour of their time costs far less than a mistake with the calendar.
You sold to buy another home to live in. This news changes nothing for you. Just check you meet the deadlines of the exemption that already existed.
Seeing your own number
A bill like this does not show up in the monthly budget. It arrives all at once, one summer. It helps to know what is left over each month, so you can see how long it takes to put that sum aside, or how much you already have. If you would rather see that without doing the accounting by hand, Household shows your household's number. The decision about the deed stays with you and your accountant.
FAQ
I sold my home in Portugal in 2025 and bought a rental. Do I pay IRS on the gain?
Yes. According to what the tax authority told ECO, the new exemption only covers sales from 2026. A 2025 sale follows the previous rules: half of the taxable gain is added to your income and taxed at the normal rates.
Has the exemption for buying another main home ended?
No. If you sell the home you live in and buy another one to live in, you can still claim that exemption, as long as you meet the deadlines and conditions in the IRS code.
How can I lower the tax on selling a house in Portugal?
Document every cost the law lets you deduct: IMT and stamp duty from the purchase, improvement works from the last twelve years and the estate agent's fee. An accountant can also compare joint and separate filing for your case.