As we mentioned, the added value is the profit you will get from the sale of your home. If this value is negative, that is, if the property is sold for less than what was purchased, then there is a loss of value (which you will also have to declare to the IRS).

It is also important to know that you may be exempt from calculating capital gains, namely in the following cases:

•      If the property you are going to sell is prior to January 1, 1989, as it is only from this date that the taxation of capital gains came into force;
•      If you reinvest the money from the property sold, which was your own permanent home, in a new permanent home, with a period of 36 months to do so;
•      If the amount earned is to settle the loan. This rule only applies to disposals of real estate that took place between 2015 and 2020 and whose loan agreements were entered into by December 31, 2014. It is also necessary that you do not own any other residential property at the time of disposal.

2. Real estate agency commission

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If, in order to sell your house, you used (or will use) real estate agents, you will be charged a commission of 5% (+ VAT) on the price recorded in the act of deed. This is currently the average amount charged by real estate agencies.

The special tax system for Non-Habitual Resident in Portugal (RNH)
This is the special tax status law for citizens who habitually do not reside in Portugal and desire to acquire real estate in our country.
 

In accordance with the article 16 of the Income Tax Code (CIRS), a subject is considered as a Non-Habitual Resident in Portugal if that person becomes a resident taxpayer in Portugal and has not been deemed resident on Portuguese territory during the five years prior to the year desired to be taxed as a non-habitual resident.
 

A citizen deemed non-regular resident by the Portuguese tax authorities has the right to be taxed, during a period of 10 consecutive years, according to the special personal income tax regime for NHR. At the end of the 10 years period, the holders of the Non-Habitual Resident status will be taxed according to the general rules of the Portuguese Income Tax Code (CIRS).
 

In concrete terms, the granting of non-regular resident status allows the person to obtain tax benefits regarding the following types of income:
Income deriving from employment and self-employment from high added value activities, as listed in the order of the Ministry of Finance;
Foreign source income from employment and self-employment;
Income from self-employment obtained through high added value activities obtained abroad;
Pensions obtained abroad;
Passive incomes obtained abroad.

For more information, please kindly take note of the annexed documents provided by the Ministry of Finance.

3. Cancellation of the mortgage

​​​​​​​If you are going to sell the house you bought using mortgage loans, it is important to cancel the mortgage, so that the house is free for the new buyer.

In this case, the request for registration of cancellation of the mortgage is accompanied by the request for registration of acquisition by purchase and sale of that property and possible constitution of a new mortgage.

This cancellation has a cost of €50 at the Land Registry Office. It is also important to be aware of possible costs for paying the loan in advance.

The special tax system for Non-Habitual Resident in Portugal (RNH)
This is the special tax status law for citizens who habitually do not reside in Portugal and desire to acquire real estate in our country.
 

In accordance with the article 16 of the Income Tax Code (CIRS), a subject is considered as a Non-Habitual Resident in Portugal if that person becomes a resident taxpayer in Portugal and has not been deemed resident on Portuguese territory during the five years prior to the year desired to be taxed as a non-habitual resident.
 

A citizen deemed non-regular resident by the Portuguese tax authorities has the right to be taxed, during a period of 10 consecutive years, according to the special personal income tax regime for NHR. At the end of the 10 years period, the holders of the Non-Habitual Resident status will be taxed according to the general rules of the Portuguese Income Tax Code (CIRS).
 

In concrete terms, the granting of non-regular resident status allows the person to obtain tax benefits regarding the following types of income:
Income deriving from employment and self-employment from high added value activities, as listed in the order of the Ministry of Finance;
Foreign source income from employment and self-employment;
Income from self-employment obtained through high added value activities obtained abroad;
Pensions obtained abroad;
Passive incomes obtained abroad.

For more information, please kindly take note of the annexed documents provided by the Ministry of Finance.

4. Expenses with documentation

Regarding the documentation required for the sale of the property, it is important that you anticipate the following values:

•      Permanent property certificate – €15 for each fraction (document valid for 6 months);
•      2nd via use license – from €35 (increases depending on the number of pages);
•      2nd via housing technical sheet – from 35€ (increases depending on the number of pages);
•      Energy certificate – from €130 (increases depending on the area of the property).

The special tax system for Non-Habitual Resident in Portugal (RNH)
This is the special tax status law for citizens who habitually do not reside in Portugal and desire to acquire real estate in our country.
 

In accordance with the article 16 of the Income Tax Code (CIRS), a subject is considered as a Non-Habitual Resident in Portugal if that person becomes a resident taxpayer in Portugal and has not been deemed resident on Portuguese territory during the five years prior to the year desired to be taxed as a non-habitual resident.
 

A citizen deemed non-regular resident by the Portuguese tax authorities has the right to be taxed, during a period of 10 consecutive years, according to the special personal income tax regime for NHR. At the end of the 10 years period, the holders of the Non-Habitual Resident status will be taxed according to the general rules of the Portuguese Income Tax Code (CIRS).
 

In concrete terms, the granting of non-regular resident status allows the person to obtain tax benefits regarding the following types of income:
Income deriving from employment and self-employment from high added value activities, as listed in the order of the Ministry of Finance;
Foreign source income from employment and self-employment;
Income from self-employment obtained through high added value activities obtained abroad;
Pensions obtained abroad;
Passive incomes obtained abroad.

For more information, please kindly take note of the annexed documents provided by the Ministry of Finance.

When buying a property, in addition to the charges associated with housing loans (if applicable), it is important to know that there are taxes that are mandatory to pay to the State, namely:

1. Municipal Tax on Real Estate Transfers (IMT)

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This tax is levied on the amount stated in the contract or on the Tax Asset Value (VPT) of the property (whichever is greater of these two amounts). It will therefore be a considerable expense, despite being paid in one lump sum.

It is important to know that the IMT rate to be applied varies depending on the location and purpose of the property in question. In the case of an urban building intended exclusively for own and permanent housing, the current rates are as follows:

•      Up to 92,407 euros: 0% rate, no installment;
•      92,407 and 126,403 euros: 2% fee, installment of 1,848.14 euros;
•      From €126,403 to €172,348: 5% fee, installment of €5,640.23;
•      From €172,348 to €287,213: 7% fee, installment of €9,087.19;
•      From €287,212 to €574,323: 8% fee, installment of €11,959.32;
•      More than 574,323 euros: 6% (single fee), no installment.

Don't forget that you must pay the IMT before the official sale of the house, because at the time of the deed, the notary will demand proof of payment of this tax.

You may be exempt from paying this tax if the purpose of the property is for own and permanent housing and whose VPT value or purchase and sale price (higher of the two) is equal to or less than €92,407, in mainland Portugal.

Taking into account the indicated values, and assuming that you are going to buy a property worth 200 thousand euros, here is how you should calculate the IMT:

On the 200 thousand euros of the property price, you will have to multiply that value by 7% and subtract the 9,087.19€. In this case, the IMT will be €4,913. That is: (200,000.00€ x 0.07) - 9,087.19€ = 4,912.81€

2. Stamp Duty (IS)

Together with the IMT, you will have to pay the Stamp Duty, whose rate is around 0.8% on the value defined in the deed.

Thus, if the value of the house is, by hypothesis, 200 thousand euros, you will have to pay 1,600 euros of Stamp Duty.

3. Municipal property tax (IMI)

 IMI is a municipal tax paid annually by any property owner. For the purposes of paying IMI, an owner is considered to be the person who owns a property or land on December 31 of the year to which the tax relates, and the IMI to be paid each year always refers to the previous year. That is, in 2020 the owners will pay the IMI for 2019.

Thus, if you have acquired a property by December 31, even a few days before this date, you will be responsible for the IMI in the following year, to be paid:

•      In a single installment, in May, if the IMI amount is less than €100;
•      In two installments, in May and November, if the amount is between €101 and €500;
•      And in three installments, in May, August and November, if the amount to be paid by IMI exceeds €500.

The special tax system for Non-Habitual Resident in Portugal (RNH)
This is the special tax status law for citizens who habitually do not reside in Portugal and desire to acquire real estate in our country.
 

In accordance with the article 16 of the Income Tax Code (CIRS), a subject is considered as a Non-Habitual Resident in Portugal if that person becomes a resident taxpayer in Portugal and has not been deemed resident on Portuguese territory during the five years prior to the year desired to be taxed as a non-habitual resident.
 

A citizen deemed non-regular resident by the Portuguese tax authorities has the right to be taxed, during a period of 10 consecutive years, according to the special personal income tax regime for NHR. At the end of the 10 years period, the holders of the Non-Habitual Resident status will be taxed according to the general rules of the Portuguese Income Tax Code (CIRS).
 

In concrete terms, the granting of non-regular resident status allows the person to obtain tax benefits regarding the following types of income:
Income deriving from employment and self-employment from high added value activities, as listed in the order of the Ministry of Finance;
Foreign source income from employment and self-employment;
Income from self-employment obtained through high added value activities obtained abroad;
Pensions obtained abroad;
Passive incomes obtained abroad.

For more information, please kindly take note of the annexed documents provided by the Ministry of Finance.

If you are a buyer, note that you will still be responsible for the costs of the deed - which may vary depending on the type of notary (public or private) and the existence of bank financing. On average, it costs between €400 and €800.

Furthermore, and if you want to ensure that the seller only sells the house to you, it is important to request a provisional registration. If you are buying a house with bank financing, this is a document required by banks. At the Land Registry, it can cost around €250.

If you use housing loans, you will also have to pay bank fees, stamp duty and mutual registration with mortgage (an amount that will also be around €250). In addition to these expenses, there will also be the amount related to the multi-risk Life Insurance, which is mandatory. The premium for this insurance is calculated based on the sum insured and the age of the policyholders, and it evolves as the amount owed.