Selling Your Property in Portugal Tax-Free: A Golden Opportunity for Retirees

An article by Henry Kent, an International Financial Adviser at Holborn Assets.

Are you a retiree or over 65 living in Portugal? If you're considering selling your primary residence, or even downsizing, you might be sitting on a golden opportunity to save a substantial amount in taxes. Portugal offers a unique tax relief program that can reduce your capital gains tax to zero. Let's explore how you can take advantage of this often-ignored opportunity.

Understanding Reinvestment Relief in Portugal

Portugal offers a unique tax provision for retirees and those aged 65 and over. This provision, known as Reinvestment Relief, allows you to sell your main property and reinvest the proceeds to a new EU property, long-term pension plan, or a tax-efficient Portuguese Compliant Bond, and potentially avoid any capital gains tax liability.

How It Works

1.      Eligibility: You should be retired or at least 65 years old on the date of the sale of your property.

2.      Window of reinvestment: You have six months from the date of sale to reinvest the proceeds.

3.      Declaration: You need to declare your intention to reinvest in your annual tax return.

4.      Flexibility: You do not have to reinvest all proceeds - only what you reinvest will be exempt from tax.

The Power of Portuguese Compliant Bonds

The most common structure used to benefit from this tax relief is, no doubt, the Portuguese Compliant Bond. As you may have read in my other articles and heard on my webinars on these structures, these bonds offer the following:

Tax efficiency

Diverse investment options

Long-term financial security and growth potential

A Real-Life Example

Consider the case of Ron and Liz, a retired couple living in the Algarve. They sold their villa for €3.5 million and reinvested €2.5 million into a Portuguese Compliant Bond within six months of the date of sale. This strategic move allowed them to:

Avoid paying Capital Gains Tax on the reinvested amount

Receive a regular income of €125,000 per year from the growth of their investment

Reinvest the remaining €1 million in a new, smaller home, also tax-free

Why This Matters to You

By utilizing this tax relief, you're not just reducing your immediate tax burden. You're also setting yourself up for a more secure financial future. These reinvested funds will grow in a very tax-efficient manner and give you a long-term sustainable income.

Don't miss out on this opportunity to potentially save thousands in taxes. Book a consultation to receive tailored advice on reducing your capital gains tax by clicking here.

Additional Considerations

Timing is of the essence. The six-month window for reinvestment is crucial.

Your potential savings will depend on your unique circumstances.

Expert advice is essential to navigate this complex area of tax law.

Take Action Now

The potential for tax savings is significant, but the rules can be complex. As a financial adviser specialising in expatriate finances in Portugal, I can help you understand if you're eligible and how much you could potentially save.

Ensure you’re not missing out on potential savings. Reach out today using the link below to explore how we can maximize your tax savings and secure your financial future in Portugal.

https://calendly.com/expats-portugal/portugal-financial-planning

Remember, everyone’s situation is different. What works for one person may not be the most advisable strategy for another. That is why it is always important to seek personalised advice tailored to your specific circumstances.

By taking advantage of this reinvestment relief, you're not just saving on taxes - you're unlocking new possibilities for financial growth and stability during your retirement years in Portugal.