# Capital Gains at death - Portugal



## gfinner (Mar 14, 2011)

My father-in-law passed leaving his children a family vacation home in Portugal. How is capital gains applied to a transfer to your children at death. It's never been used as a rental property. He hasn't spent alot of time there so I don't believe it can be declared as a principal residence. He has lived in Canada. The land he owned prior to 1989 when capital gains was brought in, so does he only pay CG on the house which was built in the mid 1990s, is the land CG tax free..


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## canoeman (Mar 3, 2011)

You really need to take advice from a solictor or lawyer familar with both Portuguese and Canadian lawand I would contact the Canadian Embassy to get a list of lawyers who are familar with both countries legal process.

A lot will depend on his birth Nationality, how his will was drawn up and his country of Residence. 
The capital gain issue I think you will find will arise from his country of Residence not Portugal.
But there will be stamp duty to pay on his estate value in Portugal.

His heirs will also reguire Portuguese Fiscal Numbers as part of the Probate process, and would not be able to inherit or receive ownership without them.

This is certainley not something you should attempt on your own, and will require a solictor to quide you through the process, obtain correct required documents and documentation, officially translated and Notarised.


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## gfinner (Mar 14, 2011)

Yes I will getting legal advice for sure but was just trying to find out what to expect. It was my understanding that stamp tax doesn't apply if the property is passed down to children...But capital gains and even property transfer tax may apply. I do know capital gains does apply to Portugal first and then I get a credit against the Canadian capital gains amount so I don't get double taxed.


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## canoeman (Mar 3, 2011)

What you are refering to as property transfer tax is when purchasing property and stamp duty replaced inheritance tax, currently 10% but there are exemptions to who pays. Children, spouse & parents and certain assets are exempt.

Presuming Canadian and UK law are broadly similar, and presuming he was Canadian by birth, died and left a will in Canada, then Probate would first be completed in Canada including any foreign assets, any tax due paid to Canadian goverment.

As there is I believe a dual taxation agreement with Portugal any tax paid on Portuguese property in Canada would be offset against possible Portuguese tax.

With Probate granted in Canada, you then need to apply for Probate in Portugal,
For that any documents, wills, probate etc in English require apostillating, translating by an official translator (it must be someone accredited by the Portuguese authorities) and certified, the will might well need verifying that it is legal in Canada, even though probate is granted.

The heirs will reguire Portuguese Fiscal Numbers, also proof of their identity requires translating and Notarising, and as probably not Resident in Portugal will reguire to grant a Power of Attorney, can be done in Canada but must be apostillated and translated to be valid in Portugal. 

So I'm sure you can see why it is so important to get the correct legal advice.


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