For people relocating from the United States to Portugal, selling a former US home after purchasing a property in Portugal can raise an important Portuguese capital gains tax question: can the gain qualify for Portugal’s main-home reinvestment relief?
Article 10(5) of the Portuguese Personal Income Tax Code (CIRS) may provide an argument in favour of relief where the Portuguese home is acquired before the former home is sold.
The key timing rule
Portuguese tax law allows the reinvestment in a new main residence to take place:
- up to 24 months before the sale of the former main residence; or
- up to 36 months after the sale.
Where the Portuguese property is acquired first, the former home must therefore be sold within 24 months of that acquisition.
When is the former home tested as a main residence?
Article 10(5)(e) of the CIRS requires the home being sold to have been the taxpayer’s main residence, supported by their tax domicile, during the 12 months before the sale — or, where the reinvestment occurred first, during the 12 months before the earlier reinvestment date.
This distinction matters. If a taxpayer buys a Portuguese home while their US property is still their main residence, the subsequent move to Portugal should not automatically prevent the relief. The relevant 12-month test is assessed at the date of the earlier Portuguese acquisition, provided the US home is then sold within the 24-month period.
Portuguese tax ruling 29304
Portuguese Binding Tax Ruling no. 29304, issued on 30 July 2026, supports this reading of the timing rule.
In that case, taxpayers acquired their new main residence before selling their former home. The Portuguese Tax Authority denied the relief because the sale did not take place within 24 months of the earlier reinvestment. It did not deny the relief merely because the taxpayers had moved into the new home before selling the former one.
The ruling confirms that, where reinvestment comes first, the 24-month deadline is critical.
Practical conditions
A taxpayer considering this approach should ensure that:
- the US property was genuinely their main residence for at least 12 months before the Portuguese acquisition;
- the Portuguese property is acquired as the intended new main residence;
- the Portuguese property is occupied and registered as the taxpayer’s main residence within 12 months of acquisition;
- the US property is sold within 24 months of the Portuguese acquisition; and
- documents are retained to evidence residence, ownership, purchase costs, sale proceeds and the reinvestment.
Important limitation
Ruling no. 29304 concerned Portuguese properties. It does not directly determine whether the same relief applies where the home sold is located in the United States.
However, Article 10(5) expressly requires the new property in which the proceeds are reinvested to be located in Portugal, the EU or the EEA. It does not expressly state that the property sold must be located in Portugal. This supports a technically credible position for a former US main residence, but the international element and the correct Portuguese tax return reporting should be reviewed carefully before the transaction.
For high-value transactions, obtaining a taxpayer-specific binding ruling from the Portuguese Tax Authority is advisable.
This article provides general information only and is not a substitute for advice based on the taxpayer’s specific facts.
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