Selling property belonging to an undivided inheritance in Portugal can produce very different tax consequences depending on what is legally transferred.
The decisive distinction is between:
- the sale of an inheritance right or hereditary share as a whole; and
- the sale of a specific property belonging to the undivided inheritance.
Under recent Portuguese case law and guidance issued by the Portuguese Tax Authority, the sale of an inheritance right may fall outside the scope of Portuguese capital gains tax. By contrast, when the heirs jointly sell a specifically identified property, the resulting gain is generally taxable as Category G income.
A binding ruling issued on 25 June 2026 — Process no. 30544 — confirms this distinction and explains how the acquisition date and acquisition value should be determined when an inherited property is sold.
Key takeaway
When all heirs sign a deed selling a specifically identified inherited property, they are normally selling the property itself—not their inheritance rights.
As a result:
- the sale is generally subject to Portuguese capital gains tax;
- each heir must declare their respective share of the transaction;
- the sale must normally be reported in Annex G of the Portuguese Modelo 3 IRS return;
- the acquisition date is generally the deceased’s date of death; and
- the acquisition value is generally the value used, or which would have been used, for Portuguese Stamp Duty purposes.
The wording and legal structure of the deed are therefore critical.
What is an undivided inheritance in Portugal?
An undivided inheritance, known in Portuguese as a herança indivisa, exists between:
- the opening of the succession, normally on the deceased’s date of death; and
- the formal division and allocation of the inherited assets among the heirs.
During this period, each heir holds an ideal share in the inheritance as a whole. The heir does not necessarily own an individually identified percentage of every asset as a separate and autonomous property right.
For example, an heir may hold a one-third hereditary share in an inheritance containing:
- a house;
- a vehicle;
- bank accounts; and
- other rights or liabilities.
Until the inheritance is divided, the heir’s position concerns the inheritance as a legal whole.
This distinction becomes particularly important when an inherited property is sold.
Is the sale of an inheritance share subject to Portuguese capital gains tax?
Not necessarily.
The Portuguese Supreme Administrative Court established, through Judgment no. 7/2025 of 29 April 2025, that the sale of a hereditary share does not constitute the onerous disposal of a property right over real estate for the purposes of Article 10(1)(a) of the Portuguese Personal Income Tax Code.
Accordingly, gains resulting from the genuine transfer of a right to an inheritance or a hereditary share are not treated as taxable real estate capital gains under that provision.
Following that judgment, the Portuguese Tax Authority revised its administrative interpretation and issued Circular Letter no. 20281/2025 of 25 July 2025.
However, this exclusion only applies where the deed or equivalent legal document clearly shows that the heirs are transferring:
- the right to the inheritance; or
- the hereditary share as a whole.
It does not automatically apply merely because the inheritance is still undivided.
What is the difference between selling a hereditary share and selling an inherited property?
This is the central tax question.
Sale of the hereditary share
In a genuine sale of a hereditary share, the heir transfers their overall legal position in the undivided inheritance.
The purchaser effectively replaces the heir in relation to that share and acquires the corresponding rights connected with the inheritance, including, where applicable:
- participation in the administration of the inheritance;
- entitlement to the relevant share of its assets;
- entitlement to request the division of the inheritance; and
- exposure to the rights and obligations associated with that hereditary position.
The transaction concerns a legal universality rather than an individually identified property.
Sale of a specific inherited property
A different situation arises when all the heirs jointly sell a specific asset belonging to the inheritance.
For example, the deed may state that the heirs sell:
the urban property registered under a particular tax registration number for an agreed price.
In this situation, the object of the transaction is the identified property itself.
The heirs are therefore not transferring their hereditary shares as a whole. They are disposing of a specific real estate asset belonging to the undivided inheritance.
The resulting gains are generally treated as taxable real estate capital gains under Article 10(1)(a) of the Portuguese Personal Income Tax Code. Article 10 expressly includes gains arising from the onerous disposal of rights in real estate within the capital gains rules.
What did Portuguese Binding Ruling no. 30544 decide?
Binding Ruling no. 30544 concerned an inheritance opened following a death in 2022.
The inheritance included:
- an urban property; and
- a motor vehicle.
In 2026, the deceased’s spouse and descendants entered into a purchase and sale agreement concerning the urban property.
The deed identified:
- the individual property being sold;
- its tax registration details; and
- the agreed sale price.
The taxpayers argued that the property was being sold while the inheritance remained undivided and asked whether the transaction could be treated as the sale of the inheritance or hereditary shares.
The Portuguese Tax Authority concluded that it could not.
The heirs had not transferred their overall rights to the inheritance. Instead, they had jointly sold a specifically identified urban property.
The existence of another asset in the inheritance—the vehicle—reinforced the conclusion that the inheritance as a whole had not been transferred.
The Tax Authority therefore ruled that:
- the transaction constituted the sale of a specific property;
- the resulting gains were taxable as Category G capital gains;
- each heir was required to declare their respective portion of the transaction; and
- the sale had to be reported in Annex G of the Modelo 3 IRS return for 2026.
The ruling was issued on 25 June 2026 and publicly reported on 26 June 2026.
Does it matter whether the property is the only asset in the inheritance?
It can matter factually, but it does not automatically determine the tax treatment.
Even where an inheritance contains only one property, the legal question remains:
Did the heirs transfer their hereditary rights as a whole, or did they sell the specifically identified property?
The Portuguese Tax Authority’s administrative guidance states that the exclusion from capital gains taxation may apply even where the undivided inheritance consists only of one or more properties.
However, the deed must unequivocally demonstrate that the subject of the transaction is:
- the right to the inheritance; or
- the hereditary share as a whole.
A conventional property purchase and sale deed identifying a specific property, its registration details and its price will usually be treated as a sale of that property.
The fact that no assets remain in the inheritance after the transaction does not, by itself, convert the sale into a transfer of hereditary shares.
The legal nature and wording of the transaction take precedence over its practical economic result.
Why is the wording of the deed so important?
The Portuguese Tax Authority will normally examine the deed or equivalent document to identify the legal object of the transfer.
A deed referring to the sale of:
- a specific urban or rural property;
- a particular land registry description;
- a specific Portuguese tax registration article;
- a defined ownership title; and
- an agreed property price
will strongly indicate that the heirs sold the property itself.
By contrast, a deed intended to transfer a hereditary share should clearly identify the transaction as the assignment or sale of:
- the right to the inheritance; or
- the seller’s hereditary share in the undivided inheritance as a whole.
The description used by the parties must also correspond to the substantive legal reality. Simply labelling a property sale as a “sale of hereditary rights” will not necessarily determine its tax treatment.
Any restructuring of the transaction should be reviewed by both a Portuguese lawyer or notary and a Portuguese tax adviser before execution.
What is the acquisition date of inherited property for capital gains purposes?
For property acquired through inheritance, the acquisition date is generally the date on which the succession opened.
In practical terms, this is normally the deceased’s date of death.
Binding Ruling no. 30544 confirms the interpretation previously stated in Portuguese Tax Circular no. 21/92 of 19 October 1992: for assets acquired through succession on death, the acquisition occurs when the inheritance opens.
Example
Assume that:
- the original owner purchased a property in 1995;
- the owner died on 10 September 2022;
- the heirs sold the inherited property on 15 May 2026.
For the heirs’ capital gains calculation, the relevant acquisition date is generally:
10 September 2022
It is not normally the date on which the deceased originally purchased the property.
What is the acquisition value of inherited property?
Article 45 of the Portuguese Personal Income Tax Code governs the acquisition value of assets obtained free of charge, including through inheritance.
The acquisition value is generally the amount that:
- was used for Portuguese Stamp Duty purposes; or
- would have served as the taxable basis for Stamp Duty if Stamp Duty had been payable.
This rule can apply even where the heir was exempt from paying Stamp Duty, as frequently occurs for spouses, descendants and ascendants.
Each heir should use the portion of the Stamp Duty value corresponding to their hereditary share.
Example
Assume that:
- the inherited property was valued at €240,000 for Stamp Duty purposes;
- there are three heirs with equal one-third shares;
- the property is later sold for €330,000.
Subject to confirmation of the exact inheritance rights, each heir would generally report:
- acquisition value: €80,000;
- sale proceeds: €110,000; and
- one-third of the eligible acquisition and disposal costs.
This is a simplified illustration. The final taxable gain may be affected by deductible expenses, monetary correction coefficients, residency status, reinvestment relief and other statutory rules.
How is the taxable gain calculated?
The initial capital gain is generally determined using the following formula:
Sale value − adjusted acquisition value − eligible expenses = capital gain or capital loss
The calculation may include:
- the relevant portion of the sale price;
- the acquisition value established for Stamp Duty purposes;
- an applicable monetary correction coefficient;
- documented acquisition expenses;
- documented disposal expenses; and
- qualifying improvement expenditure incurred within the legally permitted period.
Eligible costs may include, depending on the facts and documentation:
- estate agent commissions;
- legal and notarial expenses directly connected with the sale;
- energy certification expenses;
- registration costs;
- qualifying construction or improvement works; and
- certain taxes and charges associated with the acquisition or disposal.
The expenses must be properly documented and directly connected with the acquisition, improvement or sale of the property.
For individuals who are Portuguese tax residents, the general rule is that 50% of the net real estate capital gain is taken into account, except in specific situations in which different treatment applies. Article 43 of the Portuguese Personal Income Tax Code contains the relevant inclusion rules.
The final tax liability depends on the heir’s individual circumstances and should not be calculated by simply applying a fixed percentage to the gross gain.
Does each heir declare the full sale price?
No.
Each heir should generally declare the transaction according to their respective economic and legal share in the inherited property.
Where three heirs each hold one-third of the inheritance, each heir will normally report:
- one-third of the sale proceeds;
- one-third of the acquisition value;
- one-third of the qualifying expenses; and
- the relevant acquisition and sale dates.
However, equal division should not be assumed automatically.
The allocation must be confirmed by reviewing documents such as:
- the Stamp Duty inheritance declaration;
- the certificate of heirs;
- the will, where applicable;
- marital property rules;
- any prior gifts or allocations;
- the land registry records; and
- the purchase and sale deed.
The surviving spouse’s position may require particular attention because their entitlement can result from a combination of:
- their pre-existing share under the matrimonial property regime; and
- their inherited share in the deceased’s estate.
Which Portuguese tax return annex should be used?
When the heirs sell a specific Portuguese property and the gain falls within Category G, the transaction must generally be declared in:
Annex G of the Modelo 3 Portuguese IRS return
Each heir files the transaction in their own Portuguese income tax return.
For a property sold during 2026, the transaction must generally be reported in the Modelo 3 return relating to the 2026 tax year, filed during the statutory filing period in 2027.
The return should normally include:
- the acquisition date;
- the sale date;
- the relevant acquisition value;
- the heir’s share of the sale value;
- the property identification;
- qualifying acquisition and disposal expenses; and
- any applicable reinvestment information.
Binding Ruling no. 30544 expressly confirms the Annex G reporting requirement for the sale analysed in that case.
What if the heir is not resident in Portugal?
The sale of Portuguese real estate generally remains reportable in Portugal even when an heir is tax resident abroad.
A non-resident heir may need to:
- obtain or maintain a Portuguese tax number;
- confirm their Portuguese tax address and residency status;
- file a Portuguese Modelo 3 tax return;
- report their portion of the sale;
- determine the applicable Portuguese capital gains treatment; and
- assess whether the transaction must also be declared in their country of residence.
A double taxation agreement may regulate taxing rights or provide relief from double taxation. However, tax treaties do not normally eliminate the Portuguese filing obligation where Portuguese real estate has been sold.
The treatment should be reviewed separately for each heir because different heirs may be resident in different countries and subject to different reporting obligations.
Can the capital gain qualify for reinvestment relief?
Potentially, but only where the statutory conditions are satisfied.
Portuguese reinvestment relief is not available merely because inherited property was sold.
The rules normally require, among other conditions, that the property sold qualifies as the taxpayer’s own and permanent residence and that the proceeds are reinvested in a legally qualifying manner within the applicable period.
An inherited property that was:
- vacant;
- rented;
- used as a holiday home;
- occupied by another family member; or
- never registered as the heir’s tax domicile
will not automatically qualify for the main-home reinvestment exclusion.
The position must be analysed separately for each heir.
Practical checklist before selling inherited property in Portugal
Before signing the sale deed, the heirs should confirm:
1. What exactly is being transferred?
Determine whether the transaction concerns:
- the entire inheritance;
- one heir’s hereditary share; or
- a specific asset belonging to the inheritance.
2. What does the deed say?
Review whether the document expressly transfers:
- a right to an inheritance;
- a hereditary share; or
- an identified property.
3. What assets remain in the inheritance?
Check the original Stamp Duty declaration and any subsequent changes.
The inheritance may include movable assets, bank balances, vehicles or rights that are easily overlooked.
4. What is each heir’s correct percentage?
Do not assume equal ownership without reviewing the succession and marital property documentation.
5. What acquisition value was reported?
Obtain the Stamp Duty inheritance declaration and the property valuation used for succession purposes.
6. Which expenses can be deducted?
Collect invoices and supporting documentation before filing the Portuguese tax return.
7. Where is each heir tax resident?
Cross-border heirs may have tax and reporting obligations in more than one jurisdiction.
8. Is any tax relief available?
Review possible own-and-permanent-home reinvestment relief and any other exclusions before filing.
Common mistakes made when inherited property is sold
Assuming that every sale from an undivided inheritance is tax-free
The tax exclusion concerns a genuine transfer of the inheritance right or hereditary share. It does not generally cover an ordinary sale of a specific inherited property.
Assuming the deceased’s original purchase price is the heirs’ acquisition value
For the heirs, the relevant acquisition value is generally the amount used or usable for Stamp Duty purposes at the time of death.
Using the original purchase date of the deceased
The heirs’ acquisition date is generally the deceased’s date of death.
Declaring the entire transaction in one heir’s return
Each heir should generally report their corresponding share.
Ignoring movable assets in the inheritance
The existence of another asset may demonstrate that selling the property did not transfer the inheritance as a whole.
Relying only on the commercial intention of the parties
The deed’s wording and legal effect are essential. The fact that the heirs intended to “close the inheritance” does not necessarily change the legal nature of the sale.
Failing to retain invoices
Undocumented estate agent fees, legal expenses and improvement costs may not be accepted as deductions.
Frequently asked questions
Is the sale of inherited property taxable in Portugal?
Usually, yes. When heirs jointly sell a specifically identified property belonging to an undivided inheritance, the resulting gain is generally taxable under Category G of Portuguese IRS.
Is selling a hereditary share taxable as a real estate capital gain?
A genuine sale of a hereditary share as a whole is not treated as the sale of a property right under Article 10(1)(a), according to the Supreme Administrative Court’s uniform judgment and the Portuguese Tax Authority’s revised guidance.
Does the exemption apply when the inheritance contains only one property?
It may, but only if the transaction is genuinely structured and documented as the transfer of the inheritance right or hereditary share as a whole. The sale of an identified property is normally taxable even if it is the inheritance’s principal or only significant asset.
What is the acquisition date of inherited property?
The acquisition date is generally the deceased’s date of death, because that is when the inheritance opens.
What is the acquisition value?
The acquisition value is generally the value used, or which would have been used, for Portuguese Stamp Duty purposes, allocated according to each heir’s share.
Where is the sale declared?
A taxable sale of a specific Portuguese property is generally reported in Annex G of the Modelo 3 Portuguese IRS return.
Does each heir file a tax return?
Yes. Each heir generally reports their respective share of the proceeds, acquisition value and deductible expenses.
Is the entire capital gain taxed?
For Portuguese tax residents, 50% of the net real estate capital gain is generally taken into account, subject to statutory exceptions and the taxpayer’s individual circumstances.
Are non-resident heirs required to declare the sale?
Generally, yes. The sale of Portuguese real estate remains reportable in Portugal even when the seller is resident abroad.
Can inherited property benefit from reinvestment relief?
Only where all statutory conditions are satisfied, including the requirements connected with an own and permanent residence. Inheritance alone does not create an entitlement to reinvestment relief.
Final assessment
The tax treatment of an inherited property sale in Portugal does not depend only on whether the inheritance has already been divided.
The central issue is the legal object of the transaction:
- A genuine transfer of an inheritance right or hereditary share as a whole may fall outside Portuguese real estate capital gains taxation.
- A joint sale by the heirs of a specifically identified inherited property is generally subject to Portuguese capital gains tax.
Binding Ruling no. 30544 of 25 June 2026 confirms that where the deed is a conventional purchase and sale agreement for a specific property, the gain must be declared as Category G income in Annex G.
Because the wording of the deed can directly affect the tax outcome, the transaction should be reviewed before signature—not only when the annual Portuguese tax return is prepared.
How GoalSeek can assist
GoalSeek advises Portuguese residents, non-residents and international families on the tax consequences of inheriting and selling Portuguese property.
Our support may include:
- reviewing the inheritance and Stamp Duty documentation;
- determining each heir’s correct share;
- analysing whether the transaction concerns a property or a hereditary share;
- calculating the Portuguese capital gain;
- identifying eligible deductible expenses;
- assessing reinvestment relief;
- preparing the Portuguese Modelo 3 and Annex G;
- reviewing double taxation implications; and
- assisting with Portuguese Tax Authority enquiries or discrepancies.
For cross-border inheritances, early advice is particularly important because the Portuguese treatment must be coordinated with the heirs’ tax obligations in their countries of residence.
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