Selling property in Portugal: Taxes for Americans

Portugal's sunny weather and laid-back lifestyle have drawn plenty of Americans over the years. But circumstances change, and maybe you're relocating back to the States or want to cash in on your investment.

Whatever the reason, if you're selling your Portuguese property, you're probably wondering, "What will this cost me in taxes?".

There's no one straightforward answer, since you'll deal with Portuguese taxes, US taxes, and a few other selling costs. Capital gains tax is the main tax you'll have to pay, but it's important to be aware of other expenses, too. Here's everything you need to know.

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Table of contents
What types of taxes do you have to pay when selling property in Portugal? US tax requirements when selling property in Portugal How to avoid double taxation when selling property in Portugal Special considerations What are the tax filing deadlines in Portugal and the US?

What types of taxes do you have to pay when selling property in Portugal?

When selling real estate in Portugal as an American, there are a few taxes and fees that'll chip away at your profit. Here's what they are:

Capital gains tax

When you sell property in Portugal for more than you paid, the profit is subject to capital gains tax. Portugal recently simplified things for foreign sellers, and you now follow the same rules as Portuguese residents.

Only 50% of your profit gets taxed.¹

In other words, if you made 100,000 EUR on the sale, just 50,000 EUR counts as taxable income. That taxable portion gets added to your other income for the year and taxed at Portugal's progressive rates.

Here's what these progressive income tax rates are:

Annual income (including 50% of capital gain)	Tax rate¹
< 7,479 EUR	14.5%
7,479 EUR to 11,284 EUR	21%
11,284 EUR to 15,992 EUR	26.5%
15,992 EUR to 20,700 EUR	28.5%
20,700 EUR to 26,355 EUR	35%
26,355 EUR to 38,632 EUR	37%
38,632 EUR to 50,483 EUR	43.5%
50,483 EUR to 78,834 EUR	45%
> 78,834 EUR	48%

Keep in mind that if you're not a Portuguese tax resident and if your income doesn't come from Portugal, you'll only pay taxes on the capital gains from the property sale, not on your entire income. The gains get added to your overall income to calculate the capital gains tax rate only.

If you've owned the property for more than 2 years, you qualify for inflation relief, which reduces your taxable amount even more. If you bought your property in Portugal before January 1, 1989, you don't have to pay any capital gains tax in Portugal at all.¹

Real estate agent fees

Most sellers in Portugal work with an agent, and their commission typically ranges from 3% to 6% of the final sale price. On top of that, you'll pay 23% VAT on the commission itself.²

On a 300,000 EUR sale with a 5% commission, you'd pay 15,000 EUR to the agent, plus 3,450 EUR in VAT, for a total of 18,450 EUR. These fees are negotiable, though, especially in competitive markets.

Legal and notary fees

You'll need a lawyer to handle the paperwork and a notary to finalize the sale.

💡 Legal fees usually run around 1% to 2% of the sale price. Notary fees for registering the property transfer typically cost between 500 EUR and 1,000 EUR.²

Deductible expenses

Luckily, Portugal lets you subtract a few different expenses from your profit before calculating capital gains tax, including:¹

• The energy certificate
• Municipal Property Transfer Tax you paid when buying
• Stamp duty from your original purchase
• Real estate agent commissions
• Legal and notary fees
• Major renovations completed within the last 12 years

These deductions can help lower your taxable gain, sometimes by tens of thousands of euros, so keep every receipt.

US tax requirements when selling property in Portugal

Selling property abroad doesn't let you off the hook with the IRS. As a US citizen (or tax resident, for that matter), you need to report the sale on your tax return, no matter where you live or where the property is located.

💡 You'll file Form 8949 and Schedule D along with your regular Form 1040.³

How much you pay depends on several factors, such as how long you have owned the property, your tax filing status, and many other factors, but the rates vary between 0% and 37%.³

Sometimes, it's possible to avoid this double taxation using the Foreign Tax Credit.

Primary residence exclusion

If the Portuguese property was your main home, you might not owe US taxes on the sale at all.

The IRS lets you exclude up to 250,000 USD of profit if you're single, or 500,000 USD if you're married filing jointly. To qualify, you need to have lived in the property as your primary residence for at least 24 out of the last 60 months.³

FATCA and FBAR reporting

Selling property abroad usually means that there will be a large amount of money sitting in your foreign bank account at some point. This triggers extra US reporting requirements, including:

• FBAR (FinCEN Form 114): If the total balance in all your foreign bank accounts exceeds 10,000 USD at any point during the year, you must file this form⁴
• FATCA (Form 8938): This reports your foreign financial assets if they exceed 200,000 USD at year-end or 300,000 USD at any point during the year (400,000 USD/600,000 USD for married filing jointly)⁵

Make sure to file these on time, since being late or missing the filing can lead to penalties.

How to avoid double taxation when selling property in Portugal

If you're selling property in Portugal, you might be worried about getting taxed twice, once by Portugal and once by the US. It's a legitimate concern, but you may be able to prevent this from happening.

The US is one of the few countries in the world that taxes its citizens on worldwide income, no matter where they live or where the property is located. So, you will definitely need to report the sale of your Portuguese property to the IRS, but you may not need to pay the capital gains tax twice.

The Foreign Tax Credit lets you subtract the taxes you paid to Portugal from what you owe in the US.

For example, imagine you made a 100,000 USD profit on your Portuguese property sale. After Portugal's rules, with 50% being taxable, you end up paying 15,000 USD in Portuguese taxes.

When you file your US taxes, you must report the same 100,000 USD gain, but you can subtract the 15,000 USD you already paid Portugal. If your US tax bill on that gain would have been 20,000 USD, you now only owe 5,000 USD to the IRS.

This may sound simple, but it can be quite complicated in practice, so it's important to consult with a knowledgeable tax professional.

💡 Learn more about Portugal expat taxes.

Special considerations

Non-resident vs resident tax implications

Whether you're considered a Portuguese tax resident or not doesn't really affect how you're taxed on the property sale. However, it does affect how you're taxed on the rest of your income.

If you're a non-resident (which means you spend fewer than 183 days per year in Portugal), you're only taxed on income that comes from Portugal. For property sales, you follow the same rules as residents, with 50% of your profit taxable at progressive rates from 14.5% to 48%.¹

If you're a Portuguese resident, Portugal taxes your worldwide income. You'll pay the capital gains tax on 50% of your profit, but you'll also pay taxes on the rest of your income.

If you're selling your primary residence as a Portuguese tax resident, you may qualify for some valuable exemptions that non-residents can't use.

Primary residence exemptions

If you're a Portuguese tax resident and the property you're selling is your primary residence, you may be able to avoid the Portuguese capital gains tax. There are two ways to do this:

• Reinvesting in another home: Reinvest all sale proceeds into another primary residence in Portugal or the EU/EEA within 36 months and move in within 6 months of that deadline¹
• Retirement relief: If you're retired or over 65, you can skip the tax by putting the proceeds into an eligible pension fund or insurance contract within 6 months of the sale¹

Neither of these exemptions applies to non-residents or to properties that weren't your primary home.

Property held through entities/companies

Some people own their Portuguese property through a company or a trust. This used to offer tax advantages, but after recent Portuguese law changes, it doesn't anymore. For Americans, it can also complicate their taxes overall.

If you own Portuguese property through a foreign corporation or a trust, you face a stack of additional US reporting requirements, and missing them can trigger serious penalties.

If this is your situation, it's best to consult with a tax professional both in Portugal and in the US before starting the sale process.

Inherited property

Portugal doesn't charge the inheritance tax when property passes to direct family members, such as spouses and children. But if you inherited from someone outside your immediate family, there's a 10% stamp duty on the property's value.⁶

When you later sell that inherited property, your starting point for calculating capital gains is the property's value when you inherited it, not what the deceased person originally paid.

What are the tax filing deadlines in Portugal and the US?

Portugal tax deadlines

You need to file your Portuguese income tax return between April 1 and June 30 of the year following your property sale. So if you sold property in 2024, you'll file between April 1 and June 30, 2025.⁷

US tax deadlines

If you live in the US, your tax return is due April 15 following the year you sold the property. If you're living outside of the US, you automatically get until June 15 to file.⁸

Usually, you can pay your Portuguese tax liability first, and then claim the Foreign Tax Credit on your US tax return. A tax professional can help you figure out the best approach for your situation.

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Selling a property in Portugal triggers capital gains tax in both Portugal and the US, but you can usually avoid double taxation, especially if you work with a qualified tax professional. There are also some additional costs, such as real estate agent fees, that you should budget for.

However, the one often-overlooked cost is transferring money between Portugal and the US. Banks may charge you hefty transfer fees and currency exchange rate markups. When you're moving large amounts, like the proceeds from a property sale, these costs add up fast.

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Sources

1. Portugal Residency Advisors - Portugal Capital Gains Tax on Property
2. EasyFX - The Costs of Selling Property in Portugal
3. Bright!Tax - Selling Foreign Property
4. IRS - Report of Foreign Bank and Financial Accounts (FBAR)
5. Tax Samaritan - Owning a Foreign Property
6. Goldcrest - Capital Gains Tax Portugal
7. Titan Wealth - Portugal’s Tax for Expats
8. IRS - Frequently asked questions (FAQs) about international individual tax matters

Sources checked 12/01/2025