Portugal's capital gains exemption over 65: selling your home tax free

A second door to the same exemption

When you sell a property at a profit in Portugal the general rule is well known: 50% of the capital gain is added to your income and taxed at the progressive IRS rates². The best-publicised exception is selling your permanent home and reinvesting in another one, which the capital gains reinvestment calculator covers in detail.

There is, however, a second door, and it is made precisely for people who no longer want to buy any house at all. Article 10.º(10) of the Portuguese IRS Code allows the sale proceeds to be applied into a retirement savings product instead of into property¹. Once the conditions are met, the gain is excluded from tax just the same.

Before going further, compute the gain in the property capital gains calculator and model the exclusion in the capital gains exemption over 65 calculator.

The paragraph number changed in May 2026

It is worth starting here, because it is the reason almost everything written about this regime cites a provision that no longer carries that number. Decreto-Lei n.º 97/2026, de 20 de maio renumbered article 10.º of the Portuguese IRS Code from the old paragraph 7 onwards. The tax authority consolidated code is explicit and marks every displaced provision: this regime used to be paragraph 7 and is now paragraph 10; the rule that withdraws the benefit used to be paragraph 8 and is now paragraph 11; the proportional exclusion is paragraph 12¹.

The same diploma created a new regime in paragraphs 7 to 9, for people who reinvest in a property intended for residential letting with rent below statutory ceilings. That is not the regime covered here, but it explains why all the numbers moved up.

The five cumulative conditions

Paragraph 10 requires five things at once¹:

Two notes on subparagraph (b), because this is where people slip. First, it is enough that one member of the couple qualifies: the provision says "the taxpayer or their spouse or de facto partner". Second, the moment that counts is the date of the transfer, not the date you apply the money. Retiring two months after signing the deed is too late.

The sum: what you actually have to apply

The base is not the gain, it is the realisation value, meaning the sale price. Subparagraph (a) subtracts two things from it, and the second is the detail almost no source explains¹:

To pay not a cent of IRS on the 90,000 € gain you must apply 220,000 €, not 90,000 €. It is the same trap as the regime for people buying another home: applying only the gain leaves most of it taxable.

The two regimes add up

The second deduction in subparagraph (a) is any reinvestment already made under subparagraph (a) of paragraph 5, that is into a new permanent home. So the two regimes do not exclude each other: if you put part of the money into a new house, you only have to apply the remainder into a retirement product. In the example above, with 120,000 € already committed to a new home, the amount to apply falls from 220,000 € to 100,000 €.

Six months, and forwards only

Subparagraph (c) requires the products to be acquired "within the six months following the realisation date"¹. Compared with the regime for people buying another home, the difference is large in two dimensions:

Six times shorter, and nothing you applied before the sale counts. In practice the decision about the product has to be made by the date of the deed.

The annuity is capped at 7.5% per year

This is the condition that turns the regime into an income rather than a withdrawal, and it is the part that most surprises people who have already signed. Subparagraph (d) requires the product to be aimed "exclusively at providing the buyer or their spouse or de facto partner with a regular periodic payment over a period of 10 years or more, of a maximum annual amount equal to 7.5% of the sum invested"¹.

On 150,000 € applied, that means:

That last line is the arithmetic we have not seen published anywhere, and it is the one that matters most to someone deciding. At the maximum permitted annuity, the capital only comes back in full after 13 years and 4 months. The ten-year minimum period returns, at most, three quarters of what you applied. It is not a loss, because the product keeps paying beyond that, but it is a horizon worth knowing before signing, particularly at 70 or 75.

The public capitalisation scheme and the PEPP have no such cap

Notice how subparagraph (d) opens: "Where the investment is made by acquiring a life-assurance financial contract or by individual subscription to an open pension fund"¹. It names two of the four products. It does not mention the public capitalisation scheme, nor the PEPP.

On the letter of the law, therefore, the 7.5% ceiling and the ten-year minimum apply only to those two products. And paragraph 11, which withdraws the benefit when payments exceed "the limit set in subparagraph (d)", can only bite where that limit exists.

This is a literal reading of the provision and it is stated here as such, not implied: it is a material difference between the four products and it deserves to be confirmed with the Portuguese tax authority or a certified accountant before deciding where to put the money.

Partial application: the exclusion is proportional

Applying less than required does not forfeit everything. Paragraph 12 provides that the benefit covers "only the proportional part of the gains corresponding to the amount reinvested"¹.

Continuing the example, with 150,000 € applied out of the 220,000 € required and a 35% marginal rate:

To exclude the whole gain a further 70,000 € would be needed, applied within the same six months. The calculator does this sum and shows both scenarios side by side.

The three ways to lose the benefit

Paragraph 11 is short and worth reading before signing the product. The benefit falls away¹:

1. if the application is not made within the six-month deadline of subparagraph (c);
2. if, in any year, the payments received exceed the limit in subparagraph (d);
3. if the regular payment of the instalments is interrupted.

And in each case the gain is taxed in the year the failure occurs, not in the year of the sale. That is the least intuitive consequence of the whole regime: one withdrawal too many in the eighth year creates, in that eighth year, the tax on a gain realised eight years earlier.

What this leaves out

This regime settles the IRS on the gain, and nothing else. The following are the subject of other pages: computing the gain itself, with the acquisition value uprated by the currency devaluation coefficient, which is the property capital gains calculator; the general regime for people buying another home, which is the reinvestment calculator; the annual tax break for paying into a retirement savings plan, which is the PPR calculator; and selling an inherited home, which has its own acquisition-value rules in the inherited property capital gains calculator.

Also out of scope are non-residents, properties acquired before 1989, which the Code's transitional regime excludes from IRS altogether, and the new residential-letting reinvestment regime of paragraphs 7 to 9 created by the same Decreto-Lei n.º 97/2026.

This page is educational information and does not constitute tax advice. Always confirm your own situation with the Portuguese tax authority or a certified accountant.