selling costs

TRANSACTION TAXES TO BE PAID BY THE VENDOR 

CAPITAL GAINS

Change of ownership is automatically reported to the tax authorities by whoever performed the property transaction. Capital Gains Tax will need to be paid on the sale of property. Your capital gains are calculated according to various criteria. In general your net taxable profit results from the difference between the purchase and sale prices, after these prices have been subjected to a series of adjustments.

These include anything from taking into account inflation, deducting costs (agent commissions and other fees) or any documented improvement costs (from the final five years). Your gain is then taxed according to your residential status. Non-resident individuals pay a flat rate of 28% and non-resident companies 25%. For residents, the gain is immediately halved before being added to your final tax declaration, for which the rates are considerably lower, all depending on your final income. Another advantage for residents is the three-year rollover period for CGT exemption when the property is your main residence and you reinvest all or part of your taxable profit in another main residence property in the EU.

In the event that the registered public deed price in the purchase is lower than the rateable value the CGT will be calculated on the rateable value of the property.

INHERITANCE TAX

Since the tax reform operation in Portugal in 2003, there is no inheritance tax. As such, any transfer of property by death or gift between spouses or to descendants and ascendants will be subject to a flat rate of 0,8% on stamp duty based usually on the properties rateable value. A similar transfer of ownership to any other individuals or corporate bodies will be subject to a flat 10% rate. Please note that this situation is applicable to Portuguese residents, if you are a non-resident there may be other implications in your country of residency and would therefore be important to consult your tax advisor.

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